Starbucks Business And Marketing Plan Marketing Essay

Starbucks Business And foodstuff Plan Marketing EssayWhat was once a sm both deep brown shop opened by Gerald Baldwin, Gordon Bowker, and Ziev Siegl in 1971, Starbucks Coffee Comp any has grown into the number peerless specialisation burnt umber seller. With over 10,000 hot chocolate shops in to a expectanter extent than 30 countries, of which 4,200 atomic number 18 licensed and franchised and 6,000 argon owned, the companys main objective is to establish Starbucks as the most recognized and respected imperfection in the world, (Moon) .Currently, Starbucks is relying on sell expansion, product vicissitude, and redevelopment innovation to achieve a long-term goal once set by current chairman Howard SchultzThe topic was to hold a chain of chocolate berryhouses that would becomeAmericas third stray. At the time, most Americans had peakinal places in their lives space and shit. unless I believed that tidy sum needed an other(a) place, a place where they could g o to relax and enjoy others, or skillful be by themselves. I envisioned a place that would be separate from home or work, a place that would mean different things to different multitude, (Moon).By working toward this goal, Starbucks wants to open vernal gunstocks in both new and existing marts, expand their product development process, and cater to clients needs to eventually meliorate their financial position and surmount market share.Market SummaryTarget MarketsIn the early on stops of development for Starbucks, Schultz identified their target market as affluent, well-educated, white-collar patrons (skewed female) between the ages of 25 and 44, (Moon).Over time, market research teams bewilder recognized the new target market as younger, less well-educated, and in a lower income bracket than their more established nodes, (Moon).Market DemographicsGeographics (Moon)Data from 2002 showed that in the Southeast there was exclusively one chisel in for both 110,000 peopl e. whereas in the Pacific Northwest. There was one store for every 20,000 people. Hence, the company was far from r distributivelying existing markets.International plans showed Starbucks was operating in over 30Company-owned stores in the coupled Kingdom, Australia, and Thailand. Also, 900 licensed stores were operating in Asia, Europe, the Middle East, Africa, and Latin America.DemographicsYoung, affluent, tech-savvy customers (Hoovers) a 1999 estimate showed that 70% of customers were internet users, and directly the estimate has exceeded 90% (Hoovers).Moms with strollers (Hoovers)People combining work and a coffee berry break (Hoovers)The most normal customers average 18 visits per month, whereas the typical customer visits five times per month (Moon).Market NeedsStarbucks wants to create an bear for their customers that combine their on-the-go schedule, as well as a place to relax. Senior vice prexy of administration in North America Christine Day explains that, people c ome here for the coffee, but standard pressure is what touchs them want to stay,SelectionStarbucks menu contains brewed coffee, espresso traditions and favourites, cold crapulences, coffee alternatives, frappuccinos, and the sales agreement of whole beans.AccessibilityStarbucks operates over 10,000 sell stores. Most of the 4,200 franchised stores are located in shopping malls and airports. Starbucks coffee greases are overly marketed through market stores in the form of beans and even ice cream flavours. node ServiceStarbucks employees are referred to as partners. As of 2002, Starbucks employed 60,000 partners worldwide, 50,000 of those in the United States. From the offset when Howard Schultz tookOver Starbucks, he believed, Partner satisfaction leads to customer satisfaction, (Moon). belligerent PricingStarbucks brand coffee sold in grocery stores are similar to these prices found in the cafes.Market Forecast (Moon)Over the next few eld, an estimate for the U.S. retail c offee market expects military capability coffee to nurse a compound annual product rate (CAGR) between 9%-10%.Starbucks was as well estimated in 2002 to grow at a CAGR of some 20% top-line revenue result.As of 2002, coffee usance had risen with more than half of the population (about 109 billion people) drinking coffee every day, and an additional 52 million drinking coffee on occasion.PEST AnalysisPolitical InfluencesRelationships between coffee producing nations and USState Local government controlsEconomic InfluencesConstant demand for food and swallowsChanges in disposable income could regularise purchase take aimsSocial InfluencesConsumer preferences could shift from coffee to other beveragesTechnological InfluencesUse of technology can improve operational efficienciesMarket GrowthReports show in 2002, the number of specialty coffee drinkers has become the markets biggest reaping.An estimated trey of all U.S. coffee consumption takes place outside of the home and in places such as offices, restaurants, and coffee shops (Moon).SWOT AnalysisStrengthsThe company is good at taking advantage of opportunities.Starbucks is very profitable and has a arduous financial base, thereof allowing the company to undertake new employment ventures.Revenue increased to $5294.2 million in 2004, a 29.9% increase from 2003 (Data Monitor)Profits increased to $610 million in 2004, a 43.7% increase from 2003. give the sack earnings increased 46% (SWOT).The company is foreignly recognized and has a global presence.Their reputation is one of fine products and services.Almost 9,000 cafes in virtually 40 countries (SWOT)Widespread brand recognition, which in turn becomes brand Preference, and headlly eventually brand loyalty.Strong customer baseClusters company unitsExpands business with the continuing growth of the coffee market, especially in areas where the company is already well established, and groups stores in an area, therefore able to dominate the region. Leads to considerable financial reward without suffering from cannibalism (Data Monitor).Focus on opening stores that have convenient entryway for pedestrian and driversHelps the company capture an increasing share of the coffee marketWeaknessesReliance on beverage innovationVulnerable to the possibility that their innovation whitethorn falter over timeCompany growth is mostly driven by beverage innovation.If U.S. store growth decreases, stock is lowered in value. fall return from beverage innovation would have an adverse effect (Data Monitor).More than 75% of the companys stores are in the regular army (Data Monitor).May need to look for an assortment of countries in which to open more shops in govern to spread business risk85% of revenue is from its domestic US market (Data Monitor).Has high international brand recognition and should look to generate a greater proportion of revenue from outside the USAWould suffer greatly if U.S. stores underper organize because of economic con ditions or increased levels of competitionDependent on the retail of coffee, this could make them vague to diversify into other divisions if the need should arise.Employee efficiency is poor. impose revenue per employee ($71,544-fiscal 2004) compared to theIndustry average ($110,841) (Data Monitor)Lower income per employee ($5,294) compared to the industry average ($9,500) (Data Monitor).Lower Return on Equity than peersCompanys 5 year average roe (13.65%) have been lower than theIndustry average (15.09%) (Data Monitor).Need to effectively manage its finances to ensure that returns are at par of higher than industry average.Problems in some international operationsProblems of expansion A number of openings are failing to beSuccessful.Japanese operations The Company has experienced some same-stores sluggishness.Closures of stores in Israel and Tel Aviv Hurts growth prospects in the regionOpportunitiesIn 2004, created a CD-burning service where customers can create their own medici nal drug CDOpportunities for revenue growth by expanding its global operationsNew markets for coffee are beginning to emerge for example, in Indian and the Pacific Rim (SWOT).Targeting 15,000 international stores in the next few yearsExpansion potential questionable in Brazil, India, and RussiaChina could be one of the largest markets, and therefore the company exit steering on Beijing and Shanghai. gigantic urban populationRising economyIncrease in coffee consumptionCo-branding with other manufacturers of food and drinks and brand franchising to manufacturers of other goods and servicesCreates loyalty for Starbucks brand of late signed agreement with Jim Beam Brands to develop and market a Starbucks-branded coffee liqueur drink (Data Monitor), which has strong revenue potential becauseLiqueurs represent $4-5 billion opportunity (Data Monitor).Liqueurs with coffee represent a considerable atom of the Liqueur market.There is a significant overlap between consumers of liqueurs and consumers loyal to the Starbucks brand (Data Monitor).Growth in coffee markets Starbucks has a market share of over 40% of the special coffee market (Data Monitor). accordingly growth in this category would result in considerable opportunities for further growth and expansion in the near proximo.ThreatsCoffee may not stay in favour with customers, and another type of beverage or leisure activity could replace it.Rises in the costs of dairy products could affect the companys margins.Competition matched coffee shopsCopy cat brandsRestaurantsStreet cartsCompetition could enter the market at any time.The U.S. specialty coffee market continues to grow, and anIncreasing number of firms is looking to enter.At any time, a company with greater financial, marketing, andOperating resources could enter the market and compete directly with Starbucks.Volatile nature of the coffee market threefold factors, including weather, political, and economic conditions for example, can potentially negativ ely affect the companys business.Green coffee prices may be bear upon due to agreements establishing export quotas or restricting global coffee supplies.Slowing U.S. retail sales interior(prenominal) retail accounts for about 75% of the companys revenue growth and an even greater proportion of profit growth (Data Monitor).If current U.S. store growth continues, saturation levels within theNorth American division may be reached within five years. BeforeReaching this point, US retail sales growth will slow significantly(Data Monitor)CompetitionCompetition comes in several formsIndependent/Local coffee shopsSocial and comprehensiveDiverse and intellectualArtsy and funky, typically cozy and very welcomingLiberal and free-spiritedLingering encouraged particularly appealing to younger coffee house customersWide variety of beverages/foodAppeals to the non-traditional crowdFranchise/Large CompaniesGenerally well-recognized names (McDonalds, Krispy Kreme, Dunkin Donuts, etc.)More convenien t and accessibleEasy access in and outAppeals to the more mainstream coffee drinkersServices (Company)Starbucks purchases roasts of the highest quality of whole bean coffees.Fresh and rich brewed Italian espresso turns pastries and other mouth-watering confectionsSells coffee-related accessories (mugs, coffee makers, cups, espresso, etc.)Expanded sales into supermarkets of whole bean coffeeIntroduction the widely popular drink, Frappuccinos, to the familiarStrives for satisfied customers and a welcoming environmentWorks to have highest standards of excellence in way of businessOffers newspapers and other reading material, popular music, and Internetaccess (provided by T-Mobile)Keys to Success (Company)Rapidly expand retail operationsGrowth in its specialty sales and other operationsSelectively pursue opportunities to leverage the Starbucks brand through theintroduction of new productsContinue to be widely available and welcoming champion reputation for having specialty and gourmet coffeeMake customers feel welcome with friendly service vituperative Issues (Moon)Must increase customer satisfaction through improvements to serviceFriendlier and more attentive staff instantaneous and more efficient serviceIncrease in personal treatment ( believe customers name and order)More conditioned staffBetter overall serviceOffer part prices/incentive programsFree cups after x number of visitsReduction of priceOffer publicitys, sales to increase customer satisfactionOTHEROffer better quality and variety of productsImprove atmosphere (friendly, welcoming)Reaching out to community through involution and awarenessMore stores and convenient locationsOther critical issues Starbucks is criticized for and must be aware of are ballDriving out independentsLoss of diversityIts policy toward farming communities in developing countriesFair flipMany of these issues are vital for Starbucks to improve theirCustomers satisfaction (Simmons).Critical IssuesMarketing StrategyStarbucks Mi ssion arguing (Company)Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.The future(a) six guiding principles will help us measure the appropriateness of our decisionsProvide a great work environment and treat each other with respect and dignity.Embrace diversity as an necessity component in the way we do business.Apply the highest standards of excellence to the purchasing, roasting, and delivery of our fresh coffee o Develop enthusiastically satisfied customers all of the time.Contribute positively to our communities and our environment.Recognize that profitability is essential to our future success.Environmental Mission Statement (Company)Starbucks is committed to a role of environmental leadership in all facets of our business.We fulfil this mission by a commitment toUnderstanding of environmental issues and sharing information with our partners. growth innovational and flexible solution s to bring about change.Striving to buy, sell, and use environmentally friendly products.Recognizing that fiscal accountability is essential to our environmental future.Instilling environmental responsibility as a corporate value.Measuring and monitor our progress for each project.Encouraging all partners to share in our mission.Other points of importance to StarbucksBuilding customer loyalty around cappuccinos, lattes, and other fancy beverages, (Overshot). indispensableness to create a sense of communityWant to create a memorable experience for a customer that inspires the customer to return often, as well as to tell a friendStriving to become the most recognized and respected brand in the worldPutting people before products (Company)What a Starbucks store should be An authentic coffee experience that conveyed the artistry of espresso making, a place to think and imagine, a spot where people could gather and remonstrate over a great cup of coffee, a satisfying refuge that provi ded a sense of community, a third place for people to congregate beyond work or the home, a place that welcomed people and rewarded them for coming, and a layout that could accommodate both fast service and motionless moments (Thompson).Marketing ObjectivesTo create a Starbucks experience that makes people come for the coffee, stay for the ambience and environment, and return for the connectionTo build an image separate from smaller coffee chainsTo clearly communicate the values and commitments of the Starbucks business to their customers, kind of of only growth plans bare in the mediaFinancial ObjectivesHave each store reach a $20,000 weekly sales levelOpen new stores with lower store-opening costs (about $315,000 per store on average).Target MarketingBased on a sample of Starbucks 2002 customer base, the attitudes toward the brand wereThe chart shows that the new customers have a poorer attitude toward Starbucks in every category than the existing customers.The new customer ty pe that needs attention is45% female, 55% maleAverage age of 3637% have a college degreeAverage income is $65,000 deglutition an average of 15 cups of coffee per weekStore Expansion StrategyTarget areas with favourable demographic profiles, as well as areas that can be serviced and supported by the companys operations infrastructure.For each targeted area, bring a large city to serve as a focal point.Goal of each focal city Open 20 or more stores in that city in the first two years.Once stores cover the city, open additional stores in smaller, surrounding areas in the region.With this plan, the company had only unsympathetic 2 of the 1,500 sites it had opened between 1992 and 1997.Stores must be custom-designed.The company does not buy freestanding structures, and therefore each store is a different shape and size.Most stores range in size from 1,000 to 1,500 square(a) feet.Most stores are located in high-trafficked, high-visibility areas, such asOffice buildingsDowntown and subu rban retail centresAirport terminalsUniversity campusesBusy neighbourhood shopping areas convenient to pedestrian trafficInternational expansionAs of 2004, the company operated over 300 company-owned stores in the United Kingdom, Australia, and Thailand, as well as 900 licensed stores in Asia, Europe, the Middle East, Africa, and Latin America.Goal Have 15,000 international storesOther things to considerKiosksDrive-through windowsPositioningStore standard atmosphereGoal To make customers want to lingerSocial Appeal-Offer a sense of community, a place where people can come togetherPhysical layoutSeating areas to encourage loungingAppear upscale yet invitingAromas grass is banned in all storesEmployees are asked to refrain from wearing perfumes or colognes, and prepared foods are unbroken covered so customers would only smell coffee aromas.SoundsPlay soothing CDs that are also for saleOften offer live musicCustomer ServiceThe company sees a direct connective between customer satisf action and customer loyalty.The company believes that employee satisfaction leads to customer satisfaction (Moon).Voted onto Fortunes Top c Places to WorkEmployee satisfaction remains consistently around 80-90%.Turnover rate is 70%, one of the low in the industryFocuses on manager stability in order to decrease employee turnover, but also to help recognize regular customers and provide personalized servicesEmployees are trained to connect with customers and counseling on customer intimacy.Greet customers with a smile.Enthusiastically welcome customers into the store.Establish eye connexion.Try to remember customers names and orders if they are frequent customers.Just Say Yes policy, in order to keep the customer happy, which may go beyond store rulesExample Al shipway compensate dissatisfied customers with a Starbucks coupon entitling them to a free drinkExample Give a customer a free refill if he/she spills their drink.Advertising-The Company spends very little on advertising a nd depends on word-of-mouth promotion.Involvement in the friendshipContributing positively to surrounding communities is one of Starbucks guiding principles in the companys mission statement.Howard Schultz had the plan to build a company with soul (Student).Starbucks has been the largest corporate contributor in North America to CARE, a worldwide residual and development organization to help Third World countries where Starbucks purchases its coffee supplies.The company has an Environmental Committee that looks for ways to reduce, reuse, and recycle waste, as well as contribute to topical anesthetic community environmental efforts.The company donated almost $200,000 to literacy improvement efforts (Student).Starbucks has many community building programs to contribute positively to the communities where our partners (employees) and customers live, work, and play (Corporate).As part of Starbucks on-going commitment to share the comfort of coffee during times of crisis, the company continues to demonstrate our support of the men and women component part in the U.S. military overseas (Company).The Starbucks Foundation (Company)Established in 1997 by Howard SchultzInspired by Schultzs childishness experiences and those of other inner city childrenDedicated to creating hope, discovery, and opportunity in the communities of StarbucksMarketing MixMarketing look intoSchultz wanted to use research in order for Starbucks to challenge the status quo, be more innovative and take bigger risks.Examples of questions he asked were What could Starbucks do to make its stores an even more elegant third place that welcomed, rewarded, and surprised customers?What new products and new experiences could the company provide that would uniquely belong to or be associated with Starbucks?What could coffee be besides be hot or liquid?How could Starbucks reach people who were not coffee drinkers?What strategical paths should Starbucks pursue to achieve its objective of becoming t he most recognized and respected brand of coffee in the world?At the retail stores, a pamphlet is available for customers to share their thoughts about their Starbucks experience.Starbucks uses Customer Snapshots, similar to mystery shoppers, to evaluate partner performance in the retail stores (Moon).The four basic service evaluations includeService Did the register partner verbally greet the customer? Did the partners make eye contact with the customer? Say thank you?Cleanliness Was the store clean? The counters? The tables? The restrooms?Product Quality Was the order filled accurately? Was the temperature of the drink within range? Was the beverage properly presented?Speed of Service How long did the customer have to wait? The companys goal was to serve a customer within three minutes, from back-of-the-line to drink-in-hand.Customer Snapshot stacks (North American Stores)ProductStarbucks product-mix expanded from 30 varieties of whole bean coffees to eco-friendly cappuccino, coffee makers, and other Starbuck paraphernalia. Its product offerings have also expanded beyond pastries and coffee to oatmeal, smoothes, and wraps to keep up with the competition and satisfy more customer needs.The company has also been constantly introducing new products, such as Instant via Ready and Full pagination Tazo Tea Lattes and Tazo Tea Infusions. The Instant via Ready is an instant coffee that the company claims is indistinguishable from its regular brewed coffee (Jargon). Full Leaf Tazo Tea Lattes and Tazo Tea Infusions are the companys new tea offerings through which it hopes to attract tea drinkers (Edwards). The company also offers Starbucks coffee and cappuccino makers for consumers who wish to replace their existing home coffee makers.PriceStarbucks products are priced higher due to perceived upscale image attached to its brand. The company also began to offer $1 bottomless 8 oz. cup of coffee, with unlimited refills that cost approximately 50 cents less than an y other Starbucks products. The company is also implementing value strategies that would emphasize more on inexpensive coffee products rather being perceived as unaffordable to price-skittish consumers. For example, the company introduced $3.95 breakfast pairings, including popular breakfast items paired with a coffee, and highlights $2 brewed coffees instead of the more expensive specialty drinks (Jennings).PlaceAs stated earlier, Starbucks can be found in any neighbourhood where there is a perceived high traffic for its stores. Starbucks outlets can also be found in-store of various large chains including Barnes Noble and Target. Their locations are extremely conducive for individuals that are on the go and for those who enjoy reading or listening to music. Starbucks has also been recently testing stealth outlets, where the store is named after the street it is located on. The new stores attempt to localize Starbucks stores with no Starbucks logo on any of the products being offe red there, and instead have the specific street address as the brand name (Allison). packagingStarbucks has implemented numerous promotions to reach its target markets. Promotions are listed as follows One of the promotions that Starbucks has used is the Starbucks Card. Starbucks Card is an first step that offers customers the opportunity to promote companys products through a referral system. When a customer purchases a gift card, it not only shows brand loyalty, but it also provides the company with free advertising, and brings in new customers. Starbucks also provides a card for corporate sales, which are used for extrinsic rewards to show employee appreciation for a job well done, or a gift to client or a vendor. Coffee services delivered to offices without coffee size restrictions. appealing to a diverse customer base by offering international teas and coffees to accommodate those customers that want a taste from home or for locals that enjoy tea. Using philanthropy as a mean s for promotion Starbucks contributes to several non-profit organizations as a way to improve brand image and awareness in local communities.ControlsProblems and SolutionsIn 2002, our fellow associates, including Christine Day, recognized that customer service needed to be improved upon, and one idea to conquer this problem was to invest $40 million annually in 4,500 stores.By adding almost $9,000 to each store, this would allow an additional 20 hours of get per week.Day said, The idea is to improve speed-of-service and thereby increase customer satisfaction.According to a survey of customers, 65% believed fast service was a key attribute to their satisfaction.In the past when we thought of adding more labour hours to our retail stores, we decided against it due to the struggling economy, especially since labour was already our biggest expense.Another option instead of increasing labour hours is to increase the efficiency of the partners that we currently employ. We distant the n o value- added tasks, simplified the production process, and manipulated the store layout to take better advantage of store space.Additionally, we installed an automatic espresso political machine that was faster, reduced waste, and improved consistency while still fulfilling our customers needs. We want to continually implement the use of these machines in more of our stores.Furthermore, we want to add more drive-thru lanes to our stores. In doing so, we can still serve our customers who want a taste of Starbucks on-the go.Marketing OrganizationsAlthough we have been considered one of the worlds most effective marketing organizations, we lack a strategic marketing group (Moon).Instead, we have smaller divisions (Moon)Market research group gathered and analyzed market dataCategory group developed new products and managed the menuMarketing group developed every quarter promotional plansHowever, we need to find a way to get these divisions to collaborate so information about marke t and customer trends is not overlooked like it has been in the past and we can make better decisions about driving our business in the future.In 1995, a Stores of the Future project team was formed (Student).Their goal was to come up with the next generation of Starbucks stores to be debuted in 1996.Schultz communicated with the team and envisioned the retail stores to look and feel like, an authentic coffee experience that conveyed the artistry of espresso making, a place to think and imagine, a spot where people could gather and talk over a great cup of coffee, a comforting refuge that provided a sense of community, a third place for people to congregate beyond work or the home, a place that welcomed people and rewarded them for coming, and a layout that could accommodate both fast service and quiet moments.The team researched the art and literature of coffee throughout the ages, studied coffee-growing and coffee-making techniques, and looked at how our retail stores have already evolved in terms of design, logos, colours, and mood.The team decided upon four store layout designsA store for each stage of coffee making growing, roasting, brewing, and aroma.Each store had its own colour combinations, lighting scheme, and component materials.Also, the stores adapted to the environment, whether the store was downtown or on a college campus, for example.Recommendations For ImprovementRevamp the employee reward systemTighten focus on creating the ThirdPlace environmentFocus profitability measures on profitablesales, not just reduction in staffingReferencesCompany, The. Starbucks. .Received by 8may, 2010Corporate Social Responsibility. Starbucks Coffee. . Starbucks Corporation. 4