Principles and Practices of Marketing - Starbucks

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Teesside University of UK

Hong Kong Institute of Technology

MAR2019-N

Principles and Practices of Marketing

Assessment Report

LAU HIU FUNG

Donald Lau

11830049

V8188813

MAR2019-N

Principles and Practices of Marketing

Principles and Practices of Marketing - Starbucks

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TABLE OF CONTENTS

INTRODUCTION ....................................................................................................... 3

HISTORY AND BACKGROUND ................................................................................ 3

CHAPTER 1

PESTLE ANALYSIS FOR STARBUCKS

Political ............................................................................................................ 4

Economic ........................................................................................................ 4

Social and Culture ........................................................................................ 4-5

Technological .................................................................................................. 5

Legal ............................................................................................................... 5

Ecological and Environment ............................................................................ 5

MARKETING STRATEGIC ....................................................................................... 6

Segmentation strategies .............................................................................. 6-7

Targeting strategy ........................................................................................... 7

Positioning strategy ......................................................................................... 8

PORTER’S 5 FORCE ................................................................................................ 8

Bargaining Power of Suppliers ..................................................................... 8-9

Bargaining Power of Customers ...................................................................... 9

Threat of New Entrants .............................................................................. 9-10

Threat of Substitute Products ........................................................................ 10

Competitive Rivalry within an industry ...................................................... 10-11

MARKETING MIX FOR STRATEGIC ...................................................................... 11

Product ..................................................................................................... 11-12

Price .............................................................................................................. 12

Promotion ................................................................................................. 12-13

Place and Distribution ................................................................................... 13

SWOT ANALYSIS OF STARBUCKS

Strenghts .................................................................................................. 13-14

Weaknesses .................................................................................................. 14

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Opportunities ............................................................................................ 14-15

Threats .......................................................................................................... 15

CONCLUSION AND RECOMMEDATIONS ............................................................. 16

REFERENCE ...................................................................................................... 16-17

Introduction

This essay is to discuss the marketing strategic of Starbucks. The discussion will begin with exploration of company history to explore the business orientation of the company. The discussion will continue to conduct marketing audit for the company. The marketing audit will apply PESTLE, Five Forces, segmentation strategy, targeting strategy, positioning strategy and external Macro environment and internal analysis for the company. After the examination of the marketing environment of Starbucks, it is logical to examine the marketing mix strategies of Starbucks. Meanwhile, the evaluation will include the discussion of target customer profile as well.

Company history and background

Starbucks was established by Seattle, Washington, on March 31, 1971, by three partners who met when they were students at the University of San Francisco: English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker were developed to produce high quality coffee beans and equipment by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans. The three founders had a passion for coffee and tea and aimed at providing coffee to a large number of restaurants and bars since 2010.

The first Starbucks store was located in Seattle at 2000 Western Avenue from 1971–1976. This cafe was later moved to 1912 Pike Place. During this time, the company only sold roasted whole coffee beans and did not yet brew coffee to sell. During their first year of operation, they purchased green coffee beans from Peet's, then began buying directly from growers

In July 2019, Starbucks reported "fiscal third-quarter net income of $1.37 billion, or $1.12 per share, up from $852.5 million, or 61 cents per share, a year earlier." The company's market value of $110.2 billion increased by 41% in the mid of 2019. The earnings per share in quarter three were recorded 78 cents, much more than the forecast of 72 cents Market Environment

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Having identified the business orientation of Starbucks, we will continue to explore the marketing environment of Starbucks. The discussion will examine the PESTLE, segmentation strategy, targeting strategy, positioning strategy, Five Forces and internal organization of Starbucks. The analysis begins with the discussion of PESTLE. PESTLE is actually the composition of the initial of 6 words namely, Political, Economic, Social, Technological, Legal, and Ecological or Environment. Figure in the previous page shows the components for each element of PESTLE.

Contribution of PESTLE is an effective tool to evaluate the effects of external environment on marketing strategies. This tool can be used to discover, evaluate, organize, and track macro-economic factors which can impact on their business now and in the future. Overall, PESTLE provides an overview of all the crucial external influences on the organization.

Political in the organization analysis: The main political factor is about sourcing the raw materials. This has

gathered a lot of the attention from politicians in the West and from the source countries. For this reason, the company wants to adhere to social and environmental norms. It is willing to follow the sourcing strategies. It gives importance to fair trade practices.

Another impact is the need to follow the laws and regulations in the countries from where Starbucks buys the raw materials. Activism and increased political awareness in developing countries have made his essential.

The regulatory pressures within the home market in the US are also a factor. Multinationals based in the US are now subject to greater scrutiny of the business processes. The company must monitor political stability within the country as well. ⚫ Some other factors to consider are: ⚫ Tax policy ⚫ Employment laws

Economic in the organization analysis: The ongoing global economic recession is the prime external economic

driver for Starbucks. As I already mentioned, this factor dented the profitability of Starbucks. This has convinced buyers to shift to cheaper alternatives. As they did not quit buying coffee, Starbucks should seek an opportunity here.

The company has to deal with rising labor and operational costs. The inflationary environment and falling profitability are causing a lot of stress. Some other economic factors which can affect Starbucks are: ⚫ Local currency exchange rates ⚫ Local economic environment in different markets ⚫ Taxation level

Social in the organization analysis: As already stated, Starbucks can offer cheaper products but it might have

to sacrifice the quality. This is the main socio-cultural challenge that the start-up faces. It will expand consumer base to include the buyers from the lower and the middle-income tiers.

The “green” and “ethical chic” consumers are also concerning. They fret

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about social and environmental costs of the brands. Starbucks has to be aware of this trend.

The baby boomer generation is retiring. This means spending by older consumers will decrease. Now, Starbucks will have to tap the Gen X and the Millennials as customers. ⚫ Other socio-cultural factors to focus on are: ⚫ Changing family patterns in USA and Europe ⚫ Consumer preferences ⚫ Changing work patterns ⚫ Changes in lifestyles of population ⚫ The level of education of the population in local markets ⚫ Changing values among population

Technologies that affect the organization: Starbucks is in a good position to enjoy benefits of the emerging mobile

wave. Its partnership with Apple to bring app based discount coupons is helping it ride the mobile wave easily.

The company introduced Wi-Fi capabilities in its outlets already. Internet is important to the consumers. They can now surf the web and do work while sipping Starbucks coffee. This is an added value to the brand. It enhances the overall consumer experience.

Starbucks is also enabling mobile payments. They are testing this in pilot locations in the US. Some other technological factors to keep in mind are: ⚫ Emergence of innovative technology ⚫ Biotechnological developments ⚫ Developments in agriculture

Legal in the organization analysis: Starbucks must ensure that it does not violate any laws and regulations in

the home market and countries from where they buy raw materials. It should also stay alert about introduction of caffeine production and

consumption related policies and regulations by health authorities. Other factors that might affect the company are: ⚫ Introduction of stricter customs and trade regulations ⚫ Licensing regulations related to the industry.

Ecological in the organizational analysis: Many Starbucks business practices concern activists and international

advocacy groups. Even the consumers have expressed issues. So, the company should take these into account to continue holding consumers’ trust. Some of the other environmental factors Starbucks should worry about are: ⚫ Environmental rules and regulations ⚫ Environmental disasters in countries which produce coffee beans ⚫ Global warming and other environmental issues in a global level

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Marketing Strategies There have three criteria to analyses the marketing strategies of Starbucks

Coffee Corporation. We used segmentation, targeting and positioning to examine the marketing strategies of Starbucks Coffee Corporation. Firstly, a mix of Demographic, Geographic, behavioral and Psychographic segmentation strategies is used by Starbucks for customer profiling and understanding different customer groups. This first segmentation uses age, gender and income group of demographics and then makes the consumption of all people in the World. Obviously, according to income statistics of demographic to celebrate the festival in the annual, but it does give a good overview of the range of consumer needs in the market. For example, Christmas festival. All of these activities, entertainments and events of the holidays that will involve in transaction of Starbucks In the region of distribution of the Starbucks in the world as shown below: US, Canada, Latin America, Europe, Middle East, Africa, China and Asia Pacific region In the density of the population in considered location is Urban for Starbucks .

The second segmentation uses the different locations of Geographic to expand the market in development of business. Small businesses not required to spends budget for region and city advertisements. Large companies have the option to spread a universal message and separate message to each market.

Starbucks is the largest coffeehouse company in the world with 13279 stores located in the USA and 20891 stores in 62 countries.

There are currently eighth Starbucks Coffee in Hong Kong, which all comprise a shop as well as a cafe. The locations of the Starbucks are in Hong Kong:

(1) Open Space, OS3, 2/F, Yuen Long Plaza,Yuen Long, NT

(2) Shop A335, Level 3, Yoho Mall, 8-9 Long Yat Rd & 9 Yeung Lung,Yeung

Long, Hong Kong

(3) Hotel Lobby, Tower 1, Harbour Plaza Resort City Hotel, N.T., Tin Shui Wai,

Hong Kong

(4) Shop Nos. UG012 and UG015-UG017 on UG/Floor, Tuen Mun Town Plaza,

New Territories, Hong Kong

(5) LG 12, V City, Tuen Mun Heung Sze Wui Rd, Tuen Mun, Hong Kong

(6) Shop no. 38, Level 3, North Wing,Trend Plaza, Tuen Mun, N.T., Hong

Kong

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(7) Shop Nos. 60&62 Upper Ground Floor, Citywalk Tsuen Wan, N.T., Hong

Kong

(8) Shop LMC 301, 3/F, Lok Ma Chau MTR Station, N.T., Hong Kong

Psychographic segmentation allows marketers to segment market based

on consumer personality traits, lifestyle and social class. Segmentation allows you to better develop your product because there will be a more precise match between the product and each segment needs and wants. The lifestyle of customer segment they also like as Mainstreamer, Aspirer, Succeeder, Explorer and Reformer.

Behavioral segmentation allows the markers to segment market based

on consumer personality behaviors characteristic, degree of loyalty, benefit sought, personality, user status. Segmentation allows you to better develop your product because there will be a more precise match between the product and each segment needs and wants. Some people are Hard core loyal, and other benefits sought of people which would like to enjoy quality coffee in a relaxing atmosphere, a place to chat with friends and relatives and a place to work. Moreover, some people of their personality in enjoy coffee they are easygoing, determined and ambitious. Furthermore, some people are regular users for day to day.

Starbucks uses differentiated targeting strategy for manufacturing and

selling its offerings as per the customer segments and improve the customer satisfaction. Value-based and user benefit positioning strategies are used by the company for highlighting the functional benefits of the offerings of the company.

Starbucks uses differentiated targeting strategy for manufacturing and selling its offerings as per the customer segments and improve the customer satisfaction.The selection of potential customers to whom a business wishes to sell products or services. The targeting strategy involves segmenting the market, choosing which segments of the market are appropriate, and determining the products that will be offered in each segment. A business offering multiple products can determine if the various segments should receive one generic product (such as in mass marketing), or if each segment should receive a customized product (multi-segment), based upon the market's diversity, maturity, the level of competition and the volume of sales expected. This is also called targeting. This can express the diversity of marketing in occasion as shown below:

⚫ Starbucks Coffee,

⚫ Seattle’s Best Coffee,

⚫ Teavana,

⚫ Evolution Fresh,

⚫ Ethos Water and

⚫ Torrefazione Italia Coffee.

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Positioning refers to the place that a brand occupies in the mind of the

customer and how it is distinguished from products from competitors. In order to position products or brands, companies may emphasize the distinguishing features of their brand (what it is, what it does and how, etc.) or they may try to create a suitable image (inexpensive or premium, utilitarian or luxurious, entry-level or high-end, etc.) through the marketing mix.

Starbucks coffee use the different type of positioning in the following: Mono segment positioning: The coffee chain giant targets premium customer segment only i.e. individuals who are willing to pay extra for the quality of products and services. Adaptive positioning: Due to the tendency of increasing consumer health awareness, Starbucks Coffee developed coffee beverages with less calories such as Chai Tea Latte (103 calories) Caffe Misto (63 calories) and Iced Americano (11 calories). Standby positioning: Certain Starbucks beverages such as Frappuchino had to await changes in the market for certain period of time to find demand.

To be successful in a particular market a product must occupy an explicit, distinct and proper place in the minds of all potential and existing consumers. It has to also be relative to other rival products with which the brand competes. This may require considerable research of customer perceptions and competitor activity in order to ensure that the points of difference are meaningful in the minds of customers. Perceptual mapping is often used for this type of research.

Visibility and recognition is what product positioning is all about as the positioning of a product is what the product represents for a buyer the business is targeting. As markets become increasingly competitive, buyers have more purchase choices, and the process of setting one brand apart from rival brands is critical success factor. It is vital that a product or service needs to have a clear identity and placement to the needs of the consumers targeted as they will not only purchase the product but can warrant a larger margin for the company through increased added value. PORTER’S 5 FORCE Bargaining power of Starbucks suppliers: (weak forces)

Starbucks Coffee faces the weak force or bargaining power of suppliers. Porter’s Five Forces analysis model considers this force as the influence that suppliers have on the company and its industry environment. The following external factors contribute to the weak bargaining power of suppliers on Starbucks Corporation: ⚫ Moderate size of individual suppliers (moderate force) ⚫ High variety of suppliers (weak force) ⚫ Large overall supply (weak force)

The moderate size of individual suppliers is an external factor that

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imposes a moderate force on Starbucks. However, the high variety of suppliers weakens their bargaining power. For example, suppliers have various strategies and competencies that they use to compete against each other, with the aim of gaining more revenues by supplying more materials, such as coffee beans, to Starbucks Corporation. The bargaining power of suppliers is further weakened because of the large overall supply. For instance, there are many suppliers of coffee and tea around the world. This external factor limits the influence of individual suppliers. The overall effect of the external factors in this component of the Five Forces analysis is the weak force or bargaining power of suppliers on the company. Another consideration is the company’s policy of diversifying its supply chain as a way of addressing the trends identified in the PESTEL/PESTLE analysis of Starbucks Coffee Company. Such policy weakens suppliers’ power. As a result, suppliers’ bargaining power is a minor strategic issue in managing the business. Bargaining Power of Starbucks’s Customers/Buyers (Strong Force) Starbucks Coffee Company experiences the strong force or bargaining power of buyers or customers. In Porter’s Five Forces analysis model, this force is based on the influence of individual customers and groups of customers on the international business environment. In Starbucks Corporation’s case, the following external factors contribute to the strong bargaining power of customers: ⚫ Low switching costs (strong force) ⚫ High substitute availability (strong force) ⚫ Small size of individual buyers (weak force) In this component of the Five Forces analysis model of the business, the bargaining power of buyers is among the most significant forces affecting the company. Based on the low switching costs, customers can easily shift from Starbucks to other brands. In addition, the high substitute availability means that customers can stay away from Starbucks if they want to, because there are many substitutes like instant beverages from vending machines. These strong factors overshadow the fact that individual purchases are small compared to the company’s total revenues. The small size of individual purchases equates to the weak influence of individual buyers on the business. Despite such weakness, the other two external factors strengthen the bargaining power of customers. Thus, this component of the Five Forces analysis shows that the bargaining power of customers is a top-priority strategic issue. Starbucks Corporation’s marketing mix or 4Ps provide support for brand strengthening to partially address the bargaining power of consumers.

Threat of New Entrants: (moderate force) Starbucks Corporation faces the moderate force or threat of new entry. In Porter’s Five Forces analysis model, this force refers to the effect of new players or new entrants in the industry. In this business case, the following external factors contribute to the moderate threat of new entrants against Starbucks: ⚫ Moderate cost of doing business (moderate force) ⚫ Moderate supply chain cost (moderate force)

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⚫ High cost of brand development (weak force) The moderate cost of doing business is associated with the variability of the actual cost of establishing and maintaining operations in the coffeehouse industry. For example, the cost of operating a small coffeehouse is lower compared to the cost of operating a coffeehouse chain. In relation, smaller cafés have lower supply needs and corresponding supply chain costs. These external factors enable smaller firms to do business and compete against Starbucks Corporation. On the other hand, brand development is costly. In the context of the Five Forces analysis model, this condition reduces the threat of substitution. For example, small coffeehouses do not have enough resources to develop their brands. Also, brand development typically requires years to reach the level of strength of the Starbucks brand. The combination of these external factors imposes the moderate force or threat of substitutes against the company. Thus, this Five Forces analysis shows that the threat of substitution is a significant but limited issue in Starbucks Corporation’s strategic management. Threat of Substitute Products: (strong force) Starbucks Corporation experiences the strong force or threat of substitution. In the Five Forces analysis model, this force pertains to the impact of substitute goods or services on the business and its external environment. The following external factors contribute to the strong threat of substitution against Starbucks: ⚫ High substitute availability (strong force) ⚫ Low switching costs (strong force) ⚫ High affordability of substitute products (strong force) This component of the Five Forces analysis indicates that substitutes have strong potential to negatively impact Starbucks Coffee’s business. The high availability of substitutes makes it easy for consumers to buy these substitutes instead of Starbucks products. For example, substitutes like ready-to-drink beverages, instant beverage powders and purees, and food and other beverages are readily available from various outlets, such as fast food and fine-dining restaurants, vending machines, supermarkets and grocery stores, and small convenience stores. In addition, the low switching costs further strengthen the threat of substitutes, as it is easy for consumers to buy substitutes instead of Starbucks products. Moreover, many of these substitutes are affordable and cost less than the company’s products. Thus, this Porter’s Five Forces analysis of Starbucks Coffee Company determines that the threat of substitutes is a high-priority strategic management concern. Competitive Rivalry within an industry: (strong force) Starbucks faces the strong force of competitive rivalry or competition in the food service and coffeehouse industries. In the Five Forces analysis model, this force pertains to the influence of competitors on each other and the industry environment. In this case of Starbucks Coffee Company, the following external factors contribute to the strong force of competition: Large number of firms (strong force) Moderate variety of firms (moderate force) Low switching costs (strong force)

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The large number of firms is an external factor that intensifies competitive rivalry. Starbucks Corporation has many competitors of different sizes. In relation, the population of competitors is moderate varied in terms of specialty and strategy. In this Five Forces analysis of Starbucks, such moderate variety further strengthens the level of competition in the industry. In addition, competition is strengthened because of the low switching costs, which are the disadvantages to consumers when shifting from one provider to another. For example, this case involves minimal disadvantages to consumers who transfer from the company to other coffeehouses. Based on this component of the Five Forces analysis, competition is among the company’s top-priority challenges. Starbucks Corporation’s generic strategy and intensive growth strategies reflect strategic responses to competition. MARKETING MIX FOR STRATEGIC:

This is logical to examine the marketing mix strategies of Starbucks. Meanwhile, the evaluation will include the discussion of target customer profile as well.

Marketing Mix is getting the right goods and services to the right people at the right price with the right communication and promotion. The service of delivery on their Cookery School and a home delivery service centre.

Marketing Mix is actually the composition of 4 words namely, Product, Price, Place and Promotion as well as discuss in the following. Product strategy:

Product is a good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value (Kolter, 2017).

A product can be described as a bundle of characteristics or attributes. The total product offering is the total package that makes up and surrounds the product including all supporting features such as branding and packing services (Jobber, 2006; Kolter & Armstrong, 2017). Actual product surrounds the core product and includes more tangible issues such as product quality, product features, product packaging, product styling and products brand name.

This component of the marketing mix focuses on what the business offers to customers. Starbucks Corporation continues to innovate its product mix to capture more of the food and beverage market. The company adds or modifies product lines, with the aim of expanding its market reach and growing its market share. The following are the main categories of Starbucks products: ⚫ Coffee ⚫ Tea ⚫ Baked goods ⚫ Frappuccino ⚫ Smoothies ⚫ Other foods and beverages ⚫ Merchandise (mugs, instant coffee, etc.)

Starbucks Coffee Company’s product mix is a result of years of business

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innovation. For example, the company added the Frappuccino line after it acquired The Coffee Connection in 1994. The business also has an ongoing product innovation process that aims to offer new products to attract and keep more customers, especially because the business must attract a diverse population of customers in the international market. Thus, this part of Starbucks’ marketing mix involves beverages, foods, and merchandise that are carefully selected or designed to satisfy the needs and preferences of target consumers worldwide.

The main product strategies of Starbucks Company are to ensure customers in totally satisfied with their purchase and the values of the Starbucks are good value for money. Below we will discuss the pricing strategy of Starbucks Company.

Pricing Strategic

The balance between price and quality in which involves the psychological decision making. It needs to decide what type of customers you are going to target. Customers decide the value based on the competitors present in the market. Price reflects longer term cost reductions achieved through production experience. Customers expect price to reflect the quality level of the Coffee (Brassington, 2003). The pricing strategy of Starbucks Company is to build up the image of money for good values of Coffee.

Starbucks uses a premium pricing strategy. In the marketing mix context, this pricing strategy takes advantage of the behavioral tendency of people to purchase more expensive products on the basis of the perceived correlation between high price and high value. The company’s coffee products are more expensive than most competing products, such as McDonald’s Premium Roast. Through this pricing strategy, Starbucks maintains its high-end specialty image. Still, the company strives to develop and actually provide high quality products and satisfactory customer experience in its coffeehouses. This part of the marketing mix directly relates to Starbucks Corporation’s generic competitive strategy, in helping the business maintain its premium brand image. Following paragraph will depict the promotion strategy of Starbucks Company.

Promotion Strategies The promotion is equal to marketing communication in which setting

objectives and budgets. Then we are designing marketing entertainment and events, finally implementing events and checking the results of events. These can evaluate and control the procedure of campaigns (Institute of Direct Marketing, 2010). Promotion mix consists of personal selling, sales promotion, public relations and advertisement. The major promotion strategies of Starbucks Company are as follows:

This component of the marketing mix refers to the communication strategies used to disseminate information about the firm and its products, and to encourage customers to buy these products. Starbucks Corporation promotes its products through interpersonal relations and communications, although advertising is also part of the promotional approach. In this case, Starbucks’ promotional mix is as follows: ⚫ Word-of-mouth marketing ⚫ Advertising

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⚫ Sales promotions ⚫ Public relations

Starbucks became popular primarily through word-of-mouth marketing. In the marketing mix, word-of-mouth usually focuses on providing the best customer experience in order to encourage people to spread positive words about the business. The company also advertises its products through television, print media, and the Internet. Sales promotions are used in Starbucks Rewards, which is a program involving freebies that customers can avail after purchasing a certain amount of the company’s products. The corporation infrequently uses public relations, which has not always been successful for the business. For example, the Race Together public relations campaign was widely criticized. Still, the Starbucks Foundation continues its efforts to solve various challenges in society. The Foundation helps communities, while promoting the company’s brands. This part of Starbucks Corporation’s marketing mix shows the core significance of word-of-mouth marketing, advertising, and the supporting roles of public relations and sales promotions for the coffeehouse chain business. The specific placing strategies of Starbucks are as follows: Place and Distribution strategies

This component of the marketing mix determines the venues at which customers can access the products. Starbucks offers most of its products at cafés or coffeehouses. However, there are various other places or channels of distribution available for these products. In this case, the following are the main venues or places that Starbucks Corporation uses to reach its target customers: ⚫ Coffeehouses/Cafes ⚫ Retailers ⚫ Mobile apps

Initially, Starbucks sold its products through coffeehouses. Eventually, the company offered some of its products through its online store. This approach served as a major integration of e-commerce into the company’s strategies. However, Starbucks ended its online store operations in 2017. The strategic change reflects the company’s shift to focus on in-store experience in brick-and-mortar coffeehouses. Nonetheless, some of Starbucks’ merchandise items are available through retailers. On the other hand, mobile apps allow customers to conveniently place their orders online so they could easily get their food and drinks at the company’s coffeehouses. This part of Starbucks’ marketing mix shows how the firm adapts to changing times, technologies, and market conditions.

A marketing channel is “an organized network of Branches of other Stores which in combination perform all the events required to link Starbucks with customers to accomplish the marketing task. SWOT ANALYSIS OF STARBUCKS Strengths: Strong brand image: Starbucks Corporation is the most popular and strongest brand in the food and beverage industry. Its size, volume, and the number of loyal customers have kept growing over time.

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Strong financial performance: With a market capitalization of $81 billion, Starbucks has a stable financial position in the market. It increased its number of stores from 1,886 to 29,324 between 1998 and 2018. Extensive international supply chain: Starbucks is known to have an extensive global network of suppliers. Starbucks sources its coffee beans from three coffee producing regions, Latin-America, Africa, and Asia-Pacific. Acquisitions: Company has acquired top 6 companies including Seattle’s Best Coffee, Teavana, Tazo, Evolution Fresh, Torrefazione Italia Coffee, and Ethos Water. These acquisitions have proven quite successful for Starbucks. Moderate diversification: Starbucks has also diversified its business operations by introducing innovative merchandises and food items. One such example is the addition of ice cubes made of Coffee which results in a stronger Coffee flavor. Quality, Taste and Standardization: Due to its premium blends and delicious coffees, Starbucks has extended globally. It offers excellent quality and consistently standardized products in all the locations. Efficiency, Strategic Planning, and Reinvestment Strategy: Starbucks reinvests its profits in expanding its business in different locations. Its efficient operations and well-planned strategic decisions have produced many advantages for the company. Employee treatment: It treats its employees very well which eventually translates into happier employees serving customers well. Starbucks has been consistently listed as one of the Fortune’s Top 100 Places to Work for. Weaknesses: High prices: For many middle tiers and working consumers, Starbucks’ offerings are more costly than McDonald’s and other coffee outlets. Its high prices reduce affordability for the consumers. Imitability of products: Starbucks doesn’t own the most unique products in the market. This makes the imitability of products quite easy for other companies. Other coffee shops and food chains like McDonalds McCafe and Dunkin Donuts offer almost the same products. Generalized standards for most products: Some of its product offerings are not aligned with the cultural standards of other markets. For example, in some areas, its crafted beverages do not associate with the consumer preferences. European Tax avoidance: Due to its tax avoidance in the UK, it faced several controversies and criticisms. Reuters’ investigation found out that it didn’t pay tax on its £1.3 billion of sales in three years prior to 2012. Procurement Practices: Many social and environmental activists criticized the company for their unethical procurement practices. They claimed that it procures coffee beans from impoverished third world farmers. It has also been accused of violating “Fair Coffee Trade” principles. Recall of Products: Over the years Starbucks has recalled a lot of in-demand products. This can negatively affect the brand image of the company and lead to the loss of customer base. Opportunities: Expansion in developing markets: Starbucks has coffeehouses mainly in the US. Global expansion in a few areas like India, China and few regions of Africa can give a great opportunity to the company.

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Business diversification and Products Specifications: It can further diversify its business operations to improve overall revenue growth opportunities. Besides, developing products as per the customer preferences in the specific target market is also a profitable opportunity. Introducing new products: As the company is quite popular, introducing new products and holiday flavors (Peppermint Mocha, Eggnog Latte, Gingerbread Loaf) under its name would be profitable and welcomed in the markets. Partnerships or alliances with other firms: Co-branding always benefits. Starbucks has the opportunity to develop partnerships and alliances with major firms. This would strengthen its presence and market share. Threats: Competition with low-cost coffee sellers: Many coffeehouses offer products at an affordable rate. This can threaten the future’s stability of Starbucks which offers higher prices. Competition with big outlets: Aggressive competition with multinational companies like Dunkin Donuts and McDonald’s can also pose a threat to its market position. Imitation: Products can be imitated by both new and old rivals. Independent coffeehouse movements: There are many sociocultural threats for Starbucks. These sociocultural movements support small independent and local coffeehouse and oppose the expansion of large multinational chains. Controversy on California warning rule: A California judge ruled Starbucks and other companies in March 2018 to provide warning labels on all their coffee products. This was about preventing a violation from chemical use that may cause cancer. Philadelphia arrests: Recently, two African-American men were arrested at Starbucks that caused quite a controversy on social media against Starbucks. Starbucks employees refused them to use the restroom because they didn’t purchase anything. The CEO Kevin Johnson issued an apology to both men eventually. In the following about SWOT, I use the BCG Model to analyses and inform the critique and guides the comments.

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Conclusion and Recommendations: The conclusion of Starbucks Corporation is so top and largest coffee house with 13279 stores in America. And there are 20891 stores in 62 countries for developing. So that the result of Starbucks marketing strategies even though unusual has been very successful since last 40 years I recommend the Starbucks fulfills its customers want and needs, Starbucks will continue to be a leading force in the market. Then it will expand market because the level of need concerning coffee is moderate, but the occasion of festival is supposed to accelerate. Reference: McCarthy, E. J. (1978). Basic Marketing: A Managerial Approach. The McGraw Hill Companies, Inc. Grinstein, A. (2008) ”The Relationship Between Market Orientation And Alternative Strategic Orientation: A Meta-Analysis”, European Journal Of Marketing, Vol.42, No. 1/2, pp115-134.

Drummond, G. Ensor, J. and Ashford, R. (2008) Strategic Marketing: Planning

and Control. 3rd edn. London: Elsevier.

• Expansion in developing markets: Starbucks has coffeehouses mainly in the US. Global expansion in a few areas like India, China and few regions of Africa can give a great opportunity to the company.

• Business diversification and Products Specifications: It can further diversify its business operations to improve overall revenue growth opportunities. Besides, developing products as per the customer preferences in the specific target market is also a profitable opportunity.

• Introducing new products: As the company is quite popular, introducing new products and holiday flavors (Peppermint Mocha, Eggnog Latte, Gingerbread Loaf) under its name would be profitable and welcomed in the markets.

• Partnerships or alliances with other firms:Co-branding always benefits. Starbucks has the opportunity to develop partnerships and alliances with major firms. This would strengthen its presence and market share.

• Competition with low-cost coffee sellers:Many coffeehouses offer products at an affordable rate. This can threaten the future’s stability of Starbucks which offers higher prices.

• Competition with big outlets: Aggressive competition with multinational companies like Dunkin Donuts and McDonald’s can also pose a threat to its market position.

• Imitation: Products can be imitated by both new and old rivals.

• Independent coffeehouse movements: There are many sociocultural threats for Starbucks. These sociocultural movements support small independent and local coffeehouse and oppose the expansion of large multinational chains.

• Controversy on California warning rule: A California judge ruled Starbucks and other companies in March 2018 to provide warning labels on all their coffee products. This was about preventing a violation from chemical use that may cause cancer.

• Philadelphia arrests: Recently, two African-American men were arrested at Starbucks that caused quite a controversy on social media against Starbucks. Starbucks employees refused them to use the restroom because they didn’t purchase anything. The CEO Kevin Johnson issued an apology to both men eventually.

• High prices: For many middle tiers and working consumers, Starbucks’ offerings are more costly than McDonald’s and other coffee outlets. Its high prices reduce affordability for the consumers.

• Imitability of products: Starbucks doesn’t own the most unique products in the market. This makes the imitability of products quite easy for other companies. Other coffee shops and food chains like McDonalds McCafe and Dunkin Donuts offer almost the same products.

• Generalized standards for most products:Some of its product offerings are not aligned with the cultural standards of other markets. For example, in some areas, its crafted beverages do not associate with the consumer preferences.

• European Tax avoidance: Due to its tax avoidance in the UK, it faced several controversies and criticisms. Reuters’ investigation found out that it didn’t pay tax on its £1.3 billion of sales in three years prior to 2012.

• Procurement Practices: Many social and environmental activists criticized the company for their unethical procurement practices. They claimed that it procures coffee beans from impoverished third world farmers. It has also been accused of violating “Fair Coffee Trade” principles.

• Recall of Products: Over the years Starbucks has recalled a lot of in-demand products. This can negatively affect the brand image of the company and lead to the loss of customer base.

• Strong brand image: Starbucks Corporation is the most popular and strongest brand in the food and beverage industry. Its size, volume, and the number of loyal customers have kept growing over time.

• Strong financial performance: With a market capitalization of $81 billion, Starbucks has a stable financial position in the market. It increased its number of stores from 1,886 to 29,324 between 1998 and 2018.

• Extensive international supply chain: Starbucks is known to have an extensive global network of suppliers. Starbucks sources its coffee beans from three coffee producing regions, Latin-America, Africa, and Asia-Pacific.

• Acquisitions: Company has acquired top 6 companies including Seattle’s Best Coffee, Teavana, Tazo, Evolution Fresh, Torrefazione Italia Coffee, and Ethos Water. These acquisitions have proven quite successful for Starbucks.

• Moderate diversification: Starbucks has also diversified its business operations by introducing innovative merchandises and food items. One such example is the addition of ice cubes made of Coffee which results in a stronger Coffee flavor.

• Quality, Taste and Standardization: Due to its premium blends and delicious coffees, Starbucks has extended globally. It offers excellent quality and consistently standardized products in all the locations.

• Efficiency, Strategic Planning, and Reinvestment Strategy: Starbucks reinvests its profits in expanding its business in different locations. Its efficient operations and well-planned strategic decisions have produced many advantages for the company.

• Employee treatment: It treats its employees very well which eventually translates into happier employees serving customers well. Starbucks has been consistently listed as one of the Fortune’s Top 100 Places to Work for.

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