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Marketing Management

Executive Summary of Starbucks

Starbucks is an American organization inaugurated in the year 1971 in WA. It is well-known across the globe for retailing its specialty coffee (Taecharungroj, 2017). It has dotted its stores in across 62 countries. This marketing report envisages examining the marketing practices of Starbucks and hence, analysing them in reference to the marketing theories. In the report, the marketing practices of Starbucks are critically analysed with marketing tools involving PESTEL, SWOT and BCG matrix. The findings and the results reveal that the key issues that the organization is facing are the obscurity in terms of aligning its marketing practices with the changing needs of the customers. It is unable to adapt as per the changing lifestyle patterns. Another facet is the saturation of the market.

Contents

Introduction.

1.1 Starbucks marketing programs.

1.2 Purpose of this study.

1.3 Scope of this study.

Analysis of the Marketing programs.

2.1 PESTEL analysis.

2.2 SWOT analysis.

2.3 BCG matrix.

Conclusion.

Findings and discussion.

4.1 Effectiveness of marketing in managing sales.

4.2 Organizational marketing in building customer loyalty.

References.

1. Introduction to Starbucks

Marketing is an integral operation of a firm as it guides the way of reaching to the customers. It encapsulates the way of targeting potential customers and managing the exchange relationships (Shirdastian, Laroche & Richard, 2019). It is a preliminary component of a business. Starbucks’ product portfolio encompasses a wide array of premium-priced coffees, a variety of fresh food items, tea and beverages. It employs different marketing stratagems to ensure that the products are marketed effectively to the target market. The key objective of this assessment is to contrast the marketing practices and programs of Starbucks against the key marketing tactics and hence, investigate their effectiveness in the organizational performance and profitability.

1.1 Starbucks Marketing Programs

For meeting the requirements of the customers, Starbucks is continually engaging in different marketing tactics. It has a large marketing channel for promotional activities (Shtal et al., 2020). However, the organization is incurring intricacy in terms of maintaining the consistency of the brand. The organization is unable to communicate the imperative differentiators.

1.2 Purpose of This Study

This assessment is intended to analyse the marketing strategies of Starbucks in line with the standard marketing theories in order to comprehend the alterations required in the current marketing stratagem. The organization needs to reframe its marketing tactics. In the third fiscal quarter, the organization sustained a loss of around 10 per cent in the total revenue and also is unable to lure the customers to the cafes (Taecharungroj, 2017). This assessment will analyse these issues in the marketing strategies and hence, present the organization with the recommendations. 

1.3 Scope of This Study

This assessment investigates:

  • The impact of external factors on the marketing practices of the firm
  • The influence of internal environment on the marketing practices
  • To analyse the business unit of Starbucks

2. Analysis of The Marketing Programs

2.1 PESTEL Analysis

Political factors

Regional integration is an opportunity for Starbucks to expand on a global scale. It has allowed Starbucks to market effectively across the globe (Koojaroenprasit, 2018).

Environmental factors

The taxation level is influencing the operations of the organization and is in turn also impacting the need for Starbucks to manage the operational costs and the labour charges.

Social factors

In the US, the family patterns are continually changing and hence, they are also pushing Starbucks to accordingly alter the marketing tactics.

Technological factors

The biotechnical advancements are pushing the firm towards becoming a more integrated economy and is also forcing the firm to market the innovative aspects and the recent technological intervention being used.

Environmental factors

Coffee beans production is highly impacted by climate change. It is influencing the sales of the firm (Koojaroenprasit, 2018). Also, with the growing consensus of corporate social responsibility, the organization is enforced to reflect the same while marketing.

Legal factors

In its marketing practices, it has to ensure that the customs and the trade regulations are adhered to.

Table 1: PESTEL analysis

2.2 SWOT Analysis

Strengths

Weaknesses

Starbucks has a strong geographical presence across many countries and its market share in the US is around 36.7 per cent (Devia, Aisja & Puspaningrum, 2018). It licenses its brand logo and has become a renowned brand name in the coffee segment. It ensures to target the market segments with high-visibility and high traffic. Additionally, its diverse product portfolio is helpful for marketing practices to target a wider market segment.

Starbucks operates in around 8078 stores in the US as a result of which the market saturation has occurred and has led to self cannibalization which is diminishing its long-term growth and hence, hindering the marketing practices (Azriuddin et al. 2020). As a part of its international expansion strategy, its marketing practices have not been able to penetrate in some countries. 

Opportunities

Threats

The organization has recently ventured into tea and expanded its product portfolio, hence, refining its marketing. It can further expand the products and can also enter a different market zone. It launched a beta version as a new channel; it can further elongate the distribution channel for managing the dropping sales.

The shift in the taste and lifestyle of the choices of the consumers is greatly influencing organizational marketing activities. The organization often struggles with an inclination of the consumers towards the healthy drinks and juices (Azriuddin et al. 2020).

Table 2: SWOT analysis

2.3 BCG Matrix

Dog

Through social media promotional strategies, the organization has managed to effectively locate itself as per premium positioning. Shareholders take pride in holding the merchandise of the brand.

Star

The premium and specialty coffee contribute to a total of 25 per cent of the overall revenue of the firm, henceforth; it is definitely the star for the business. The organization has laid out its plans to double its food vertical by the year 2025 (Devia, Aisja & Puspaningrum, 2018). The organization is throttling its food chain and is making sure that effective promotional activities are employed to communicate the same to the customers. It also provides the free in-store refills so that more customers are lured.

Cash Cows

The bread winner for the firm is its food section and the aromatic taste which has managed to attract the customers. It faces tough competition from the rivals like Café Coffee Day, Barista, Costa Coffee and many more, still the organization has managed to make sure that the loyal framework of the customers is cultivated (Atzori, Shapoval & Murphy, 2018). It communicates about its well-trained staff and ambience to attract consumers.

Question mark

Its consumer packaged goods operate in a low growth market and there is quite an uncertainty in this vertical.

3. Conclusion on Marketing Management

This assessment has maintained a key refrain of analysis of the marketing practices of Starbucks. On the basis of the analysis, the following are the key evident facets:

  • The organization is incurring intricacy in terms of aligning its marketing practices with the changing needs of the customers. It is unable to keep pace with the changing lifestyle patterns.
  • The market saturation has posed an adversative impact on the organizational activities and it has also lead to self cannibalization.
  • The marketing strategies have been effectual in terms of promoting a wide portfolio of products.

4. Findings and Discussion on Starbucks

Findings of this assessment will be presented into two major segments:

  • Effectiveness of the marketing in elevating sales
  • Organizational marketing in building customer loyalty

4.1 Effectiveness of The Marketing in Managing Sales

It is evident from the analysis of the organization's marketing activities that it has been suffering from the issue of the inability in adhering to the needs of the customer due to the changing lifestyle and perceptions. Since many people are now shifting towards healthy drinks, the drinks offered by Starbucks such as Frappuccinos which is a Caramel Cocoa Cluster is full of calories. Customers might not prefer the caramel dripping advertisements. Most of the offerings provided by Starbucks are having more than 15 grams of fat, 500 calories, sugar and whipped cream. More than 70 million adults in the US are obese; keeping this in mind there is a need for Starbucks to modify its product portfolio (Atzori, Shapoval & Murphy, 2018). It needs to indulge in aggressive marketing of its healthy drinks such as whole milk Cappuccinos, hot and iced tea, cold brew and many more. This can be beneficial in addressing its dropping sales.

4.2 Organizational Marketing in Building Customer Loyalty

The organization reported in the year 2013 that it serves more than 500 customers a day and is wishing to inflate this number to 750 by the year 2020. It has built a strong brand name which has allowed it to gain the potential customers (Atzori, Shapoval & Murphy, 2018). The organization has also adopted the shrewd strategy of strategic alliance and making smart acquisitions. It has marketed its company-oriented stores and worked in joint ventures such as one with Nestle in the international market. It is evident from the analysis that the coffee segment of the firm is the most profitable and is the major bread earner. Also, in order to avoid saturation, it is vital that the coffee section is expanded and is extensively marketed in the emerging markets such as India, Brazil and Mexico.

References for Marketing Management

Atzori, R., Shapoval, V., & Murphy, K. S. (2018). Measuring Generation Y consumers’ perceptions of green practices at Starbucks: An IPA analysis. Journal of foodservice business research21(1), 1-21.

Azriuddin, M., Kee, D. M. H., Hafizzudin, M., Fitri, M., Zakwan, M. A., AlSanousi, D., ... & Kurniawan, O. (2020). Becoming an International Brand: A Case Study of Starbucks. Journal of the community development in Asia3(1), 33-43.

Devia, A. N., Aisjah, S., & Puspaningrum, A. (2018). The influence of brand experience and service quality to customer loyalty mediated by customer satisfaction in Starbucks coffee Malang. MEC-J (Management and Economics Journal)2(2), 161-170.

Koojaroenprasit, S. (2018). Services Marketing Mix of Starbucks Coffee in Bangkok, Thailand. Asian Social Science14(9).

Shirdastian, H., Laroche, M., & Richard, M. O. (2019). Using big data analytics to study brand authenticity sentiments: The case of Starbucks on Twitter. International Journal of Information Management48, 291-307.

Shtal, T. V., Buriak, M. M., Amirbekuly, Y., Ukubassova, G. S., Kaskin, T. T., & Toiboldinova, Z. G. (2018). Methods of analysis of the external environment of business activities. Revista EspacioS39(12).

Taecharungroj, V. (2017). Starbucks’ marketing communications strategy on Twitter. Journal of Marketing Communications23(6), 552-571.

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