Starbucks Marketing

PlanShanna Cui, Nakyung Kim, Stephanie Kubota, Jade Tsan

Company Description

Starbucks Corporation is an international coffeehouse chain based in Seattle, Washington, United States of America.

Company Description

❏ MissionTo inspire and nurture the human spirit - one person, one cup and one neighborhood at a time

❏ Vision“Together we will elevate our partners, customers, suppliers and neighbors to create positive change. To be innovators, leaders and contributors to an inclusive society and a healthy environment so that Starbucks and everyone we touch can endure and thrive.”

Company Description (Cont.)

❏ Goals❏ Learn, aspire, partner and

innovate

❏ Ethical sourcing, Environmental Impact and Community Improvement

Company Description (Cont.)

❏ Core CompetenciesHigh quality coffee and products at accessible locations and affordable prices, provided a community to share in the coffee drinking experience, and variety of choices

❏ Sustainable Competitive AdvantagesThe differentiation strategy of being a premium and unique coffee-drinking provider

Industry Analysis

Starbucks primarily operates and competes in the retail coffee and snacks store industry.

Industry Analysis

❏ Had a had a decade of growth

❏ Experienced a major slowdown in 2009 due to the economic crisis and changing consumer tastes

❏ Grew at a low annualized average growth rate from 2008 till 2013

❏ Be forecasted to grow because of an improving economy, increase in consumer confidence and expanding menu offerings within the industry

❏ Dominates the industry with the largest market share

Competitor Analysis

While Starbucks has become the biggest coffee chain, its primary competitors are fast service corporations.

Competitor Analysis- Dunkin Donuts

❏ Rivalry was born when Dunkin Donuts added lattes to their menu.

❏ Dunkin provides low cost coffee that attracts price sensitive consumers.

❏ The east coast is filled with Dunkin Donuts lovers.

❏ Neither Starbucks or Dunkin Donuts dominate consumers preference.

Competitor Analysis- McDonalds❏ In response to the coffee war, McDonalds brought

in 2008 McCafe.❏ McDonalds location outweigh Starbucks shop,

giving McCafe to spread through vast locations without incurring major expenses.

❏ McCafe menu resembles the Starbucks menu. Yet McCafe provides similar products at a fraction of the price.

❏ The company focuses on a wide range of products which makes it challenging to compete with specialized companies.

Company Analysis

Strengths:❏ Leading coffee chain

with 20,519 stores worldwide.

❏ Starbucks owns 32.6% of the market share.

❏ Shops are found at every corner.

Weaknesses: ❏ High quality coffee

and customer service is tied to its high prices.

❏ Not all Starbuck stores have been accepted internationally.

❏ Limited liquidity.

Company Analysis

Opportunities:❏ Expanding products: K-cup,

teas, juices and bottle drinks.

❏ Technological Advances: Starbucks App that have reward programs to increase customer loyalty.

❏ Starbucks products are available in supermarkets.

Company Analysis Threats:❏ Lossing price

conscious customers.

❏ Price of the supply of coffee beans fluctuate.

❏ Saturated coffee market in developed countries.

Company Analysis Starbucks-Star:❏ Net revenue

increased between 2003 until 2005.

❏ Industry sales growth rate between years 2004 and 2005 is 56.3%

Starbucks (BCG) Matrix

Consumer AnalysisProblem Recognition

❏ Coffee lovers❏ People who need caffeine (i.g.

College students, workers)❏ People who wants tea or bread

Information Search❏ Reputation❏ Accessibility❏ Quality of products❏ Promotion,

coupons❏ Price Alternative

Evaluation

❏ Dunkin Donuts❏ McDonalds

Purchase Decision

Starbucks!!

Need coffee

Post-purchase behavior❏ High consumer satisfaction

(American customer satisfaction index, 2014)

Market-Product Focus

Marketing and product objectives“To say Starbucks purchases and roasts high-quality whole bean

coffees is very true. That’s the essence of what we do – but it hardly tells the whole story. Our coffeehouses have become a beacon for coffee lovers everywhere. Why do they insist on Starbucks? Because they know they can count on genuine service, an inviting atmosphere and a superb cup of expertly roasted and richly brewed coffee every time (Starbucks Corporation).”

Target MarketsCollege students & Working professionals

Market-Product Focus (Cont.)

Points of Differences“Starbucks’ unique selling point is the “rich experience” that goes beyond a cup of good coffee.

1) Differentiated Products❏ Espresso beans: They throw away ground espresso

beans if they last longer than 30 minutes.❏ Coffee machine: Most stores of Starbucks have

upgraded their coffee machine to the Swiss-made Mastrena, which is high quality- espresso machine.

Market-Product Focus (Cont.)Points of differences2) Differentiated Service❏ Smartphone application: Payment, coupons,

membership level (green, gold), find locations

❏ Training employees: 30 hours training (Barista), ordering process in 3 minutes

❏ Hidden menu: over 180 of secret menus

Market-Product Focus (Cont.)Points of differences ❏ Starbucks’ hidden menu : Secret lattes,

Frappuccinos, macchiatos, and drinks

Market-Product Focus (Cont.)

PositioningHigh quality & high price : high quality of products with excellent service and atmosphere.

High

HighLow

Low

Price

Quality

(Perceptual map)

Product Strategy

In the maturity phase, Starbucks has to defend its market shares while maximizing profit.

Product Strategy (Cont.)❏ Products range from coffee, handcrafted

beverages, merchandise, to fresh food such as baked pastries and sandwiches

❏ Offers exceptional customization of its beverages for its customers

❏ Uses product expansion by introducing seasonal drinks

❏ Depends on word of mouth and social media for its promotions

❏ Utilizes branding strategy of having different brands such as Teavana, Tazo, Evolution Fresh, to reach out to other markets and sell more products

Pricing Strategy❏ Does not emphasize price as a competitive advantage, sells service to their customers instead

❏ Due to strong the strong identity of the brand, Starbucks is able to maintain its pricing

❏ Previously raised the prices of the tall sized coffee beverages exclusively

❏ Uses price skimming by offering premium price for premium products

❏ Psychological pricing: customers that want higher quality coffee buy products that are higher priced

Thank you!