Starbucks Marketing Analysis

Executive summary . 1 In 1971 three partners Jerry Baldwin, Gordon Bowker and Zev Siegl opened up a small coffee shop called Pequod, but this name was rejected by some of the current stakeholders and renamed Starbucks. Starbucks has since grown into a multinational super chain that occupies over 20,000 stores, across 61 different countries. The company’s main objective is to be the “worlds most recognized and respected brand across the globe”.

By working with this goal Starbucks has a strong, positive brand image, engaging customers with every sale, and making an impact on local communities, whilst expanding its product range and development to customers. Starbucks will have to improve their promotional methods as well as products in order to take control of more market share. Environmental Analysis 2. 0 Political issues 2. 1a Tariffs and International Trade regulations: * Multinational companies such a Starbucks will still be affected as they operate in over 50 countries around the globe. APEC, G20 and the CAIRNS Group for agriculture are aiming to find new methods in which they are able to reduce current tariffs * Importing from different countries. Thus effecting is sales around the globe. Government Stability: * Introduce stores to the Middle East. They were then put under pressure to discontinue their sales due to disheartening boycotts. * Rumor has caused for local economies and residents to lead violent situations involving their stores, employees and customers. * Funding to the Israeli military for weapons against middle east.

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Economical Influences 2. 2a Exchange rates * If the dollar falls due to an economic recession, effects such as rise in tariffs, (coffee beans, Sugar etc. ) * Prices inflate thus affecting the consumers as extra costs may be added. * Customers may go to local competitor for cheaper more affordable coffee as they may source locally grown beans or cheaper quality product Social Factors 2. 3a Green Movement * Consumers want to see companies giving back to the environment. * Starbucks require all outside suppliers to meet their criteria to allow for sustainable development. Starbucks has created partnerships with conservation international; Green teams in order to focus on protecting the planet and our living environment through waste reduction, company wide recycling, and energy and water conservation programs. * Starbucks were able to reduce their carbon Footprint of 1,006,954 Mtons in 2011 by 2. 7% compared to that of 2011 Responsibly grown coffee * 2009 Starbucks bought 367 million ponds of coffee. 80% (299) of this came from C. A. F. E Approved * Product Quality * Economic Accountability Social Responsibility (Evaluated by Third Party) * Environmental Leadership (Evaluated by Third Party) * Starbucks Goal is to have 100% of their coffee certified or varied by an independent party by 2015. Fair Trade * Help locally grown small-scale coffee farmers to increase their sales, through purchasing fair trade coffee beans. * Provides empowerment as they invest in farms and communities. * Starbucks has purchased over 40 million pounds meaning they are the largest purchaser of fair- trade coffee beans in the world. Technological Factors 2. 4a Starbucks and Apple Introducing a reward system that allows one to top up money as well as purchase Starbucks from ones iPhone or android * Free items based on their frequent visits and purchases.

* Ecommerce Legal Factors 2. 5a Tax * Loop hole in UK law * Starbucks pay 8. 4 million in taxes over the past 14 years. * Other Firms may be discouraged from investing into the United Kingdom * Potential of being forced to pay non-obligated tax. SWOT ANALYSIS 2. 1b Strengths: Internal / External * Large Market share – 32% * Takes advantage of opportunities * Customer service * Customer loyalty 65% of survey respondents fully aware * Very Profitable company and strong financial base * 26. 5 bn revenue * 1. 6 bn Profits * Large workforce – 8500 across the united kingdom along 5000 more opening coming + 300 more stores * Value workforce * Ranked 8 In Fortunes Most admired companies (2011) Weaknesses: * Depend too much on one product. * Vulnerable to failing * Need to be cost efficient to sustain profitability * Customer awareness * Time consuming for busy students * Fail to advertise loyalty card * Customers miss opportunities * Small variety of product Cause for competitors to be used by customers * No more Starbucks experience * Moving away from its history Opportunities * Whole sale to supermarkets * 112,285 Student in North East * Students most aware about Starbucks * Entry into Asian markets * Internet Sales Threats * Economic collapse * Competitors opening up automated machines * Competitors offer more products Marketing Strategy 3. 0 Marketing Objectives: * Increase in Sales/profit * Expanding into the Asian markets will effectively bring in new customers as these countries become more affluent. Starbucks would have to whole sale local supermarkets, this will make the product more reachable to those customers who are not located near a Starbucks as well as increase in profits being made * Address easier method for quick sales and purchases * Customer awareness * Currently 65% of survey participants were more familiar with Starbucks over the other brands. * Improve 35% awareness through promotions. * 66. 3% of survey participants age 18-24 * 13. 5% fully loyal to brand * Push Loyalty cards * More consumer orientated

Financial Objectives * Insure all shops reach a set goal e. g (? 15,000 pw) * Financial stability * Open Newer shops which are cost effect * Insure all disposable cash is used correctly * Reusable cup venture * North East full of students Market research 4. 0 The feedback given to our group was very positive about the research that we conducted and the understanding of different research techniques (qualitative and quantitative). The assessor credited us for the in-depth knowledge we had as well as explanation of framework.

Having gotten this positive feedback from both presentations I felt that I had been going in the right direction with the study on Starbucks. There were a few pointers on how to present the information more clearly, which would keep the audience engaged more. I Conducted quantitative research in order to analyze and get a better understanding in numbers of the way in which people related to the relevant brands we were conducting our reports for. We produced a survey across n=163 applicants in order to accumulate accurate readings. I came across a few actors, which could affect Starbucks negatively and positively. 65% of the n=163 participants are fully aware of Starbucks activity and usually chose Starbucks as their local cafe. 70% found Starbucks to give them a positive experience when buying their product. 52. 1% of participants were very satisfied with their experience at their Starbucks cafe, whilst 13. 5% did not feel satisfied with their experience. This has brought attention to the way in which Starbucks staff interacts with their consumers as well as prepare and promote the product. Necessary steps must be taken to ensure the 13. 5% feel comfortable inside their selected Cafe). The Beginning of 2012 was a harsh time for Starbucks as it came under scrutiny by the United Kingdom for Tax evasion. However the methods in which Starbucks used to avoid paying the full sum was completely legal. This now has caused for Starbucks brand image to become distorted by the negative coverage of the media, this in turn will not only set Starbucks back at increasing its profits but also how people perceive them as a company.

Inducing the question will the current 13. 5% non-satisfied customers raise due to the brand image Starbucks has now fallen into. The Major finding that has come up is that Starbucks needs to take advantage of its current 112,285 student based consumer, which makes up a large percentage of the North East. Promoting to students will bring in large amounts of profitable opportunities. Students often look for good deals during their time at university. During their studies they will spend majority of their time in libraries, conducting research etc.

Promoting a method in which Starbucks can help make their experience of purchasing coffee less time consuming as well as more affordable would in sure students take advantage of the opportunities given to them. Further to the findings of the research Starbucks is to open 800 new stores creating 5000 more jobs across the North East alone. This could in fact help reduce the unemployment of 25. 8% who conducted the survey and hold relevant skills that would fur fill the requirements to work within Starbucks and further more allow for part time work for those 30. 1% in full time education nd 24. 5% who are undertaking part time courses due to financial or personal obligations. Marketing Mix 5. 0 Product| * Correct features or services tailored to the target customer base. * Providing a larger range of food and beverages to suit all needs. * Provide more “Extras”| Place| * Provide Homely atmosphere * Comfortable * Easy to find| Price | * Premium Prices * Brand image is based around quality and the customers’ product/experience satisfaction * Only fair trade coffee in the UK * Customers are willing to pay 10-20 pence more per cup. Promotion| * Loyalty card reward system * Restore brand image * Self service * Target students in North East UK * Use new marketing techniques to restore company face | Detail Marketing Mix (Promotion) 6. 0 There are two main promotional aspects Starbucks should focus upon, retaining current consumers and attracting new customers. Starbucks should also take a look at pushing their loyalty cards/application (iPhone and android) further as this would engage their customers and influence consumers to buy more of their products there for entitling them to the rewards.

This will not only be attractive to consumers but will in turn create an illusion of free goods and cause for the customers to come back for their benefits; In long term increase the consumers spends so they are able to obtain their rewards. Consumers would most likely return to Starbucks with their loyalty card, as going to a competitor would not earn them the stars necessary for their rewards. Promoting these loyalty cards at the till (point of sale) where staff will be able to convince the customer to the purchasing of these cards, will certainly get the customers attention.

These will also however help to fulfill the marketing objectives ‘increase in sales’ and ‘retaining current customers’. The Cards should be given a unique QR code, which can then be added to ones IPhone, or android device through the simple scanning of the QR barcode which leads the customer to the Starbucks application, where they will be able to input their personal information and even link them with the Starbucks Facebook page. This would make it much easier to keep track as well as allow customers to leave feed back and a rating about the Starbucks store they have just visited.

This will ultimately allow all consumers in the location to see which has the best customer service while at the same time give the manager at the store relative information, which will allow them to improve on their services. The second promotional aspect is to improve on Starbucks brand image after the ‘Tax Scandal’ everyone has been made very aware of. Not only does this go against everything Starbucks stands for but the scandal has also had a very hard impact on Starbucks brand image.

It would be in the best interest of Starbucks to run an advertising campaign, which would specifically show how Starbucks has improved the lives of local communities, farmers and helps build and provide them with necessary business skills so they are able to compete on the global market. Although this could be costly it would in fact enhance their brand image and give them a competitive advantage, creating a new wave of consumers and keeping the current ones whilst also keeping to the marketing objectives ‘Improve brand image’ and ‘increase in sales’.

Further more to the improvement of Starbucks brand image they could run a apology promotion campaign in there stores located in the United Kingdom which could last for a 2 month period. During this time the staff would give free coffees out to the public before 2pm. As this would give current consumers a sense of care from Starbucks and in turn boost their consumer loyalty. A new buy one get 1 free promotion on all fair trade coffee beans that targets consumers to get involved with the sale of fair trade products.

This promotion would help aid local fair traders with sales that they will be able to put back into the company and the well being of local communities and farmers. Improving Starbucks Brand image. Promoting express self service machines places of study (book stores, library) and gas stations as this would give them a competitive advantage and increase in profits as these would be more convenient for consumers looking for a quick coffee and not have to resort leaving their place of study and avoid the unwanted queues.

Starbucks could promote these in away, which targets the average busy consumer especially in the northeast where a large majority of the nine regions are students and educational staff. These machines would be a huge competitive advantage, as Starbucks would bring the product to them, which will in turn allow for more time to focus on their work. Promoting the Starbucks reusable cup program in to the Northeast as a trial for 12 months. Would express Starbucks social responsibility in saving our environment by reducing the amount of paper cups wasted each day.

This program would be on a trial basis at first and eventually move across the rest of the UK and then other regions of the world. This promotion would really help rebuild Starbucks brand image as it sticks to every value the company holds, whilst at the same time urges the public to get involved, as one of the stages to the release of the reusable cups is the submission of public design concepts, which would then be put to a public vote every 2 months to allow for change and diversity amongst the designs. Financials 7. 0

A pragmatic approach must be taken when considering the estimated demand within the North East, as collecting and securing data for Starbucks is difficult. A break even analysis can be described as: The total revenue meets the total costs and anything above the break even line will be considered as profit. Although break-even analysis is a very useful marketing analytical tool, It can have its limitations, as it may lack in the accuracy of the numbers. Total fixed costs = ? 831,200 Total variable Costs per Unit = ? 0. 64 Expected selling price = ? . 40 Break even analysis = 831,200/(2. 40-0. 64) = 472,272 unites Controls The Above Gauntt chart illustrates the dates and dependencies between each section of the marketing plan in which the suggested marketing strategies will be implemented. Gauntt charts are very useful to marketers as it shows a measurable time in which tasks must be completed. To insure all phases of the marketing plan goes correctly, performance metrics will be used to quantify how well the current plan is going and how satisfied the customers are.

From here one could develop an on going continuous improvement strategy. One would only focus on important factors such as Cost, quality, effectiveness and speed Reflective statement: When it comes to data collection, one must remember the importance of carrying out both secondary and primary research (qualitative and quantitative). This is because secondary research can only help one to under stand so much. From understanding ones competitor and building a marketing strategy around them, to recapping previous marketing reports and current client lists.

Where as primary research insures you have the current up to date information, which is reliable. Conducting this research can be very expensive, time consuming and can be very tedious, as one needs to focus on certain areas and the collection of data in a method such a surveying, interview, first hand study and tallying etc. The most difficult part of collecting data was finding accurate secondary information on the Internet, as a lot of it has not been fully updated and I had no way of researching through internal data nor external data bases and ad to use out dated books, the internet by searching for journals, Newspaper articles etc. This could lead to certain areas of the report to be less accurate as one would not fully understand their competitors marketing strategy, issues relating to the brand. Compared to the primary data collection that was conducted in the form of a survey to a sample group of 163 people. When considering the steps I have taken and the methods used to compile the data, I would insure that in the future when conducting market research, that all primary methods of data collection were illustrated correctly.

I found that the surveys were very useful but at the same time they did not hold relevant questions, as well as did not indicate numbers on the page so that if the participant had some questions, it would be very difficult to navigate through the pages quickly and answer them. For time management purposes I would conduct the survey process differently, as the current method was very time consuming as well as mind numbing, when having to input all the collected data into an SPSS program.

I would conduct all surveys online, as this would be much easier to compile data and export them to the SPSS program for further analyzing which would allow for time to be focused on another area instead of collecting the surveys back as well as inputting the collected data. I would also create a timeline on a gaunt chart and give my self a set of deadlines for when all surveys should be sent out, when focus groups should be conducted, compiling secondary research etc. nce all is complete I could then use the rest of the time to write a sufficient report that will answer all key questions as well as guide the reader correctly in the path that I have set out to achieve. However the main issue that I have learnt about during the qualitative research methods such as focus groups, is that over the study of conducting research these sessions are very ‘observer dependent’ and the results from the group discussion are really dependent on the observer’s perception of the information that is being discussed in conversation.

This could lead to inaccurate results as the observer could miss interpret the discussion that is going on and become confused with the relevant data thus causing for invalid information, which of course could lead to a inaccurate report, Which could cause for a firm to fall behind when developing a marketing plan and strategizing ways in which they could over take their competitor in the current market. References: Bank of England. (n. d. ). Monitary Policey. Retrieved january 10th, 2013, from http://www. bankofengland. co. k/monetarypolicy/Pages/default. aspx CNN MONEY FORTUNE. (2011). WORLD’S MOST ADMIRED COMPANIES. Starbucks, Retrieved from http://money. cnn. com/magazines/fortune/most-admired/2012/snapshots/10567. html. Engskov, K. (n. d. ). Starbucks Coffee Company in the UK. Retrieved january 10th, 2013, from http://starbucks. co. uk/blog/starbucks-coffee-company-in-the-uk/1238 Higher Education Statistics Agency. (n. d. ). Statistics – Students and qualifiers at UK HE institutions. Retrieved january 13th, 2013, from http://www. hesa. ac. k/content/view/1897/239/ MarketingProfs (n. d. ). What is a breakeven analysis and does it have any limitations? . Retrieved january 10th, 2013, from http://www. marketingprofs. com/Faqs/showfaq. asp? ID=138&CatID=10 Schwartz, P. (2008, February 7). What is the Starbucks experience . Retrieved january 10th, 2013, from http://customeru. wordpress. com/2008/02/07/what-is-the-starbucks-customer-experience/ Snapsurveys (n. d. ). Qualitative vs Quantitative Research. Retrieved january 13th, 2013, from http://www. snapsurveys. om/techadvqualquant. shtml Starbucks . (n. d. ). Facts about Starbucks in the Middle East. Retrieved january 10th, 2013, from http://news. starbucks. com/article_display. cfm? article_id=200 Starbucks . (n. d. ). Responsibly Grown Coffee. Retrieved january 13th, 2013, from http://starbucks. co. uk/responsibility/sourcing/coffee Starbucks . (n. d. ). Tackling Climate Change. Retrieved january 10th, 2013, from http://www. starbucks. com/responsibility/environment/climate-change Szary, D. (n. d. ). Metrics for dummies.

Why do we need metrics? , Retrieved from http://www. ere. net/2003/06/24/metrics-for-dummies/Quora. (n. d. ). What is starbucks market share globally and in the US?. Retrieved january 10th, 2013, from http://www. quora. com/Business/What-is-starbucks-market-share-globally-and-in-the-US Green, N. (n. d. ). Why Starbucks shouldn’t pay a penny more tax in the UK. Retrieved january 13th, 2013, from http://www. politics. co. uk/comment-analysis/2012/12/04/comment-why-starbucks-shouldn-t-pay-a-penny-more-tax-in-the

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