The Marketing Strategy Analysis of Starbucks Corporation

Under todays dynamic market place, strategicalal selling formulation has become to a longer extent and more signifi piece of tailt whether of the functional or the fundamental. Especially, although monetary crisis pencil checked economy growth slowdown, it did non cause a honest influence for mountain range umber shop. As Howard Schultz said, CEO of Starbucks, I dont weigh we had a business plan for the severity of what has taken place. History present to us that a downturn in the economy would not involve us, and in f characterization, we would be recession-proof. (Katie Couric, 2008) Based on Financial Times, Starbucks revealed that strong meshing of $242m of 2008, a jump from the $64m it recorded during the parallel period last stratum and total revenues for the quarter were $2. 7bn, up 4 per cent from the $2. 6bn recorded during the comparable quarter at the end of 2008.It illustrated that consumers exit still allowance pension prices for its umber even in u ncertain economical times. Greg Farrell 2010) In this essay, besides demonstrating the concept of strategic marketing, I allow for take Starbucks mickle, join States for a depicted object to define its position in this turbulent chain umber shop market. Then, identify the customized mess production and evaluate how the constitution be active and communicate the market. Next, the strategic importance of Starbucks pile, United States leave behind be examine by various spears such(prenominal) as demand chain burn down, study and TOWS, PESTLE, set policies and so on with practical examples.Finally, establish on these strategic analyses, the recommendations will be on tap(predicate) for the governing body to mend the competitiveness all over this competitive market in the afterlife. Brief history of Starbucks Corporation Starbucks Corporation, United States (NASDAQ SBUX), the largest international coffeehouse chain company over the world, opened in 1971 by Gerald Baldwin, Gordon Bowker and Zev Siegl in Seattle, Washington, United States. In 1982, Howard Schultz, the present CEO of Starbucks, joined the company as Director of Retail Operations and marketing.In 1987, Howard Schultz purchased Starbucks chain and rapidly scared to expand. The number one emplacement outside Seattle was established at Waterfront mail in Vancouver, British Columbia, and Chicago, Illinois. In 1992, its initial public offering (IPO) on the stock market with common stock being traded on the Nasdaq field of study Market under the trading symbol SBUX. In 1996, Starbucks opened root store outside of U. S in Japan. Today, there atomic number 18 more than 15,000 stores in 50 countries all of the world, including with over two thirds in the bag market in the United States.The products sold include coffee, beverages, merchandise, and fresh fare and consumer products such as coffee beans, Starbucks cups and so on. Besides, Starbucks engages in gaining the daubs s upply look upon such as business responsibly nowadays that earn the treasure and trust of the partners and guests. They claimed that two areas including ethical sourcing, surroundal stewardship and community involvement would be focused on. For example, the plan of Starbucks Corporation is that by 2015, all of the coffee will be grown using ethical trading and responsible maturement practices.Besides, they also said that by 2015, 100% of our cups will be reusable or recyclable. So, what Starbucks Corporation emphasized is not only the tangible products, provided the intangible as find outs such as brand image or the add value. The development and concept of the Strategic Marketing First of all, I trust to define what is market and marketing. The word market crowd out be referred to the exploit of exchange controlled by supply and demand, and the price involved.The word marketing is the kind between supply and demand and now favors demand and consumer choice. (Chapman and Cowdell, 1998) Trace tolerate to the origins of modern marketing, it is from the Industrial Revolutions in Britain around 1750 and in the Germany and USA around 1830. The emphasis earlier was on how to do it, with a focus of the technique of marketing. As time goes by, mass pay more assistance on the philosophy of marketing and influence on stakeholders and society as a whole. contact and Fahy, 2009) Therefore, the strategic marketing becomes more and more significant since it can help organizations to find its own position of the competitive market thus, they in effect(p) can secureify their dodge against whether the existing or the emf competitors.Therefore, organizations should dissever the marketing environment including competitive environment (its immediate competitors and guests) and the macro-environment (the wider social, political and economic setting they operate. In order to develop the right scheme whether for short-run or long-term, organizations not only need to know the concept of strategic marketing but also how to use it within the competitive marketing. In addition, fundamental to strategic thinking is the concept of strategic fit. It indicates how organizations match the familiar resources and capabilities with the opportunities in the foreign environment. The strategic model used to evaluate the correctness of the vision or decision reservation of the organizations (Hooley G et al 2008).A competitive advantage can be developed successfully by a adequate and uncomparable combination of capabilities and resources. Neverthe slight, organizations should pay more attention to classify the differentiation between resources and capabilities. Capabilities are focused on the accomplishment effect of the organizations possesses, whereas resources is connected to the inputs to production owned by the organizations. In former(a) words, they should seek the appropriate balance between the marketing of functionalism and fundamentali sm under this ever-changing market actually.Black Box Method Kotler et al. (2009) explain that the consumer is regarded as a blue corner in the sense that the consumers expression is a in condition(p) response to marketing stimuli. After consumers making decision of purchase, the black box concept in behavior science responses. Because of the extraneous stimulation, the consumers decision making attend to will be rivaled by the marketing cookery and environment. The significance and the strengths of the model is that after consumers figure outing the various stimuli in their mind, they will react in particular(prenominal) ways.Generally speaking, in the model, the external elements to the consumer will move to behavioral stimuli however, before a specific behavioral reply is created, the consumers decision-making process and personal characteristics will interact with the stimuli. On the other(a) hand, in the black box model, people cant get much info about the way human mind operates. The weakness of this model is people still cannot get the ideas of what goes on in the brain and have no ideas about what goes on in there.In other words, through the black box model the briny internal process and influences of consumer behavior can be identified when consumer behavior operates, but the way how consumers convert the data, together with the stimuli, to act specific responses cannot be available. So, it is just called the black box model. (Kotler et al. 2009) The figure is shown the content and process involved in the black box model. Therefore, in order to experience consumers behavior in the market, organizations need to realize the fundamental process of perception and motivation. finished economic depth psychology and behavioral adds value can help organizations to break the marketing provision (Chapman and Cowdell 1998). Take Starbucks Corporation for example, last year (2009) in order to to maintain its brand image as a grant customer bring, it revealed a long term, multi-million dollar advertising campaign in the US, as it seeks to combat perceptions that its products are over-priced. As Howard Schultz, chief executive, said that they indicated the recent value focused offerings had improved customers perception of the value of its products and it is based on the companys research (Jonathan Birchall 2009).Source Keegan et al. (1992, p. 193) Marketing Demand mountain range Approach Demand is the relationship between needs and wants and also can be inferred to producer/ supplier and consumer. Whole markets are motivated by demand consumers can exercise demand by choice freely (Chapman and Cowdell 1998). A demand chain is composed of the organizations which sell products or helpings. For example, from the customer perspective, the demand chain whitethorn be composed by the customers who lead the sales transaction and the suppliers who sell or create the goods.Or from the supplier perspective, the suppliers create or of fer the products and the customers buy it. In addition, the market for specific products or service can be defined by a three-dimensional box. The three sides of the box are product purchase, purchaser crowd and buyer location (Chapman and Cowdell 1998). For example, the demand for Starbucks Corporation can be defined using this method. Buyer group could be identified by age, knowledge or salary characteristics such as students, white collar workers and retired people. ingathering purchase could identify the range or type the products offering such as beverage, pastries, whole coffee beans, coffee-related retail items and so on. Then, buyer location could be described the locations of buyer groups. Under this complicated and competitive coffee market, the demand chain approach is appropriate for managers to use the concept of identifying the market air divisions. Once the demand is identified, the necessary change and strategic marketing supply of the business environment cou ld be evaluated effectively.The competitive position and market segmentation of Starbucks Corporation Position describes the characteristic place in the market and becomes heavy more and more in a competitive market because it cooks the comparisons to be set between organizations, products and services. It also bring outs the market segmentation to be assort and the competition analysis and market analysis to be connected to an organizations strategy.The market segmentation is produced by the differences in customers needs, wants and attitudes (Chapman and Cowdell, 1998. Take Starbucks Corporation for a case, numerous cheap coffees are available, what is its draw under this competitive coffee market? The idea can be also referred to the role of positioning is to support that process, not to be it. (Mintzberg et al 2009) The advantage of defining the position is to help Starbucks Corporation both defend itself and attacking the existing or potential competitors by utilizing the strategic tools such as Porters generic strategies, Porters louvre forces and so on.For example, using Porters generic strategies for the strategic tool shown below, differentiation focus is Starbucks Corporations position compared with other competitors. Hence, the suitable strategy could be set by it. Through identifying the position of the market, not only analyzing the competitors but creating competitive advantages is necessary to organizations. Competitor identification is the employment of competitor analysis and it investigates competitor strategies, objectives, capabilities and prediction of response patterns.In addition, the process is to offer a foundation of competitive advantages, defining their future strategies. competitive advantages are the resources and skills of the organizations classification of the organizations core competences could be available by analyzing those factors (Jobber 2001). Customized mass production of Starbucks Corporation For Starbucks, it is very all important(p) that it provides mass customization to their customers. They obey the conception which is every customer is unique. Therefore, both products and services are created to be a unique acquaintance and atmosphere for the customers individually.So, what customer pay for is not just the products or services but including the unique experience and atmosphere. As B. Joseph Pine (1999) said, We have shifted from a goods economy (coffee beans in a can) to a service economy (hot coffee at a diner) to an experience economy (coffee sold in a special mug, in pleasant surroundings Starbucks). In other words, under an ever-changing economy, what trend the organizations should number is that converts products into services and thusly services into a unique and memorable experience.The unique and memorable experience is the differentiation between Starbucks and its existing or potential competitors. Starbucks Corporations Strategic Marketing Planning Strategic Marketi ng Planning includes the competitive position creating of both the organization and its offerings, core strategy decision making and implementing that strategy. The significance of intend marketing strategies for organizations are to pick out sure that the organizations capabilities are appropriate or not and it is not just for short-term but for the long-term (Hooley et al, 2008).Besides, organizations also need the market size up to model and understand the key factors in the marketing environment. A marketing audited account could be defined that it is an essential tool for the periodic follow-up of any organizations marketing effectiveness. It is the way to analyze organizations environment, activities and strategies critically, and improve them (Chapman and Cowdell, 1998. ) Starbucks Corporations strategic marketing planning starts with marketing audit and it could be divided to three parts, macro environment, internal environment and external environment.Macro environment is examined to recognize the directions and patterns inter environment is scanned to evaluate the strengths and weaknesses and opportunity and threat is involved in external environment. * PESTEL analysis For macro environment, it could start with PESTEL analysis (an acronym for Political, Economic, Socio-Cultural, Technological, Ethical and Environmental and Legal factors) of the organizations environment. Starbucks Corporation tends to classify main drivers which play important role in the strategic marketing planning by its PESTEL analysis.Take the socio-cultural environment for example identifying the difference such as consumer preferences could shift from coffee to other beverages can help Starbucks Corporation conclusion the target groups by setting the suitable marketing strategies. In addition, increase usage of community networks such as Facebook in the technological environment can provide Starbucks Corporation the efficient way to promote the brand on the popular cha nnel nowadays. In other words, organizations can understand the macro environment by using strategic tools and then set the appropriate marketing strategies for not only now but for the future.Appendix-A provides the summaries of Starbucks Corporations PESTEL environment * SWOT analysis For internal environment (strengths and weaknesses) analysis, its goal is to make organizations to get valuable chances and then to enable them taking advantages of them. For external environment (opportunity and threat) analysis, a marketing opportunity is a field of buyer interest and need that organization with high-pitched possibility of beneficially satisfying. In addition, an environmental threat is a danger by a prohibit development or trend that would lead to decrease realise or sales (Kotler and Keller 2009. According to the information of the internal environment and external environment, Starbucks Corporation develops SWOT analysis to classify the key strengths and weaknesses related t o opportunities and threats (Appendix-B). take care this case, the strengths such as strong global coffee brand, differentiated atmosphere and customer base loyalty would let Starbucks Corporation to grow the market tract in new markets such as roughly specific cities with high population density in China.Besides, take the other care for example, confront the threat of more and more competitors are from various channels such as McDonald in the competitive market, Starbucks Corporation develop new strategy to defense it. Last year (2009), Starbucks Corporation embraced customer research surveys and ran its first major advertising campaign (Claire Cain Miller 2010). * TOWS Matrix The SWOT analysis provides the identification of organizations strength, weaknesses, opportunities and threats. Nevertheless, according to such an nalysis, it is rarely and static of the development of definite substitute strategies. Hence, the TOWS Matrix is instituted for analysis the competitive situat ion of organizations or lead to the evolution of four different sets of strategic alternatives. In addition, the TOWS Matrix is a conceptual structure and begins with the threats since organizations try to make strategic marketing planning under the pressure of perceiving danger, crisis, or threat (Koontz and Weihrich 2007). Appendix-B shows the example of TOWS Matrix.Starbucks Corporation plans to shake off the majority of its $40m marketing budget to promote its Via brand of instant coffee and Frappucino drinks through grocery stores (Greg Farrell 2010. ) This is the example for the SO strategy of Starbucks Corporation based on the strength of strong global coffee brand and the opportunity of New products/services/ distribution channels. In addition, take the other case for example, in 2009 the New York Citys Department of Health and amiable Hygiene released the results of a study about the ordering habits at one hundred fifteen Starbucks stores in the city.The study, which was conducted in 2007, found that the amount blended drink had 239 calories. The average cup of coffee had 63 calories. The popularity of blended coffee beverages has grown in recent years, Dr. Thomas A. Farley, the citys health commissioner, said in a statement. Unfortunately, many of these drinks are loaded with calories. Your afternoon pick-me-up may be weighing you down. After that announcement, Valerie ONeil, a vice hot seat at Starbucks, said in a statement We offer well food and beverage options for our customers, including blended coffee beverages less than 100 calories. looking for forward, we continue to find helpful ways to deliver information for our customers to make more informed choices. (A. G. Sulzberger 2009) This is the example for the ST strategy of Starbucks Corporation based on the strength of product diversification and the treats of healthy issue (calories). In other words, by using the TOWS Matrix, organizations can know that how to take advantages of the opportunities. Meanwhile, the meet of weaknesses could be minimized and defense them against threats.By clearly identifying the analysis of threats, opportunities, weaknesses and strength, organizations can make the appropriate strategic marketing decisions actually. Pricing strategies of Starbucks Corporation Price may be defined as the value (measures by whatever federal agency is appropriate) given to a product or a service by a market. The price of a product or a service refers to the term by which it can be acquired, and may be denotative in monetary or non-monetary terms (Chapman and Cowdell 1998).In organizations, designing set strategies effectively not only needs a systematic approach but also a complete understanding of consumer psychology and then just can set or adapt prices appropriately (Kotler and Keller 2009). Consider the case of Starbucks Corporation, last year (2009) they announced a new pricing scheme. It included the price decreased of many of its popular pr oducts such as brewed coffees and lattes. This action is in order to confront the danger of the other organization with offering lower price coffee such as McDonalds stealing price sensitive customers (Claire Cain Miller 2009).However, in this article written by Claire Cain Miller in the New York Times, it also mentioned Starbucks increased some drinks price including Frappuccinos and caramel macchiatos. The reason is that Starbucks thought there are less competition from rivals in higher-end more complex drinks. Starbucks is attempting to make the most profit from its loyal customers who are desired on its products and expecting they will patronize Starbucks continually. Jobber and Fahy (2009) stated that positioning strategy is one of the key factors influencing price-setting decisions.Positioning strategy includes the creation of a differential advantage and the preference of target market. These factors affect price enormously. In addition, price is the main element to make gre at influence to the marketing strategies since it is the only factor of the marketing mix that impact on the generates revenue directly. Indeed, the pricing strategy plays a very important role of organizations because it is can be a good indicator of its future growth potential.