Starbucks Answer for Strategic Mgmt Case

7/28/2019 Starbucks Answer for Strategic Mgmt Case

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Scenario

Starbucks coffee houses are an inspiration to all those who love coffee. Starbucks loyal customers can

expect a genuine service, a quality cup of coffee and a friendly environment.

Starbucks began its services in 1971 as a roaster and retailer of a whole bean and ground coffee, tea and

spices. The company which began its operations as a single store now extends its services to consumers

in over 50 countries with over 17000 retail stores.

The product portfolio of the company extends not only to coffee but to handcrafted beverages,

merchandise, fresh food and consumer products.

Starbucks is a company which has identified the importance of marketing planning. Before any marketing

activity or a campaign is implemented a detailed marketing plan should be outlined it in order to ensurethat it is in line with the overall corporate objectives of the company and to plan the required resources.

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Question

Explain the stages of the marketing planning process with reference to Starbucks.

Answer

Starbucks coffee is a well known and popular coffee brand which is available in many countries

throughout the world. Starbucks offers the finest coffees through over 170, 000 retail outlets situated

across the world.

Marketing planning is important to Starbucks. Marketing planning:

provides clear direction for the marketing efforts

Level 3 Market Intelligence and Planning Business Management & Marketing1


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it helps define specific tasks and responsibilities

it helps to identify the prerequisites and resources for planned activities

it helps to identify areas of opportunities including new market potentials,

it specifies and ensures that marketing activities are evaluated and controlled properly to ensure

that money and other wastages are minimised.

The marketing planning process consists of the following stages:

Situational analysis

The first stage of the marketing planning process is the situational analysis. The macro, meso and the

micro environments are analysed in the situational analysis.

The main changes in the external marketing environment arising from the PESTEL analysis and the

Porters five forces analysis include the following;

New market entrants

Changes/ fluctuations of coffee prices

Changes in buying habits of consumers

The critical success factors of Starbucks highlighted from the internal environmental analysis of the

company are:

The availability of wide range of exclusive speciality coffee selections, flavours and variety

Ambience and friendly services offered

Its brand reputation for coffee and as a respected and a responsible employer

Continuous innovation

Thus the following SWOT analysis is derived for Starbucks as a summary of the internal and external

environmental analysis:

Strengths

International recognition and global presence

Strong customer base

Brand reputation

Respected employer (voted for Fortunes Top

Weaknesses

Heavy reliance on beverage innovation mainly

Lack of diversification into other areas

Employee efficiency is comparatively poor

Problems in some international operations



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100 companies to work for in 2005)

Disciplined innovator

Strong ethical values and commitment to the

environment

Opportunities

Global operations can be expanded to realise

revenue growth

Growth in coffee markets

Stable credit ratings strengthen stakeholder

confidence

Threats

Increased competition

Reduced spending power of consumers

Rises in cost of dairy products

Objectives

The marketing objectives of Starbucks are as follows:

1. To expand to more than 100 locations in the UK by year 2020

2. To add a new product each year

Strategies

Growth Strategies

By expanding the number of speciality branches the company aims to compete effectively with small town

individual coffee shops rather than being seen only as a corporate entity. This objective will be achieved

by the company strategies of growth through market penetration and competing strategy of focused

differentiation

STP Strategy

As a part of STP strategies the company is planning to consider geographic segmentation. Suitable

segments will then be targeted and the coffee products will be positioned accordingly.

Tactics

Product Continue to offer high quality distinctive taste products. More coffee varieties along with other

juices should be innovated. In addition to this, health conscious beverages will be developed by



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Starbucks. Finish developing in-home/on-the-go single cup brewing systems within year 2011 so that it

can be launched next year.

Price Premium pricing will be continued along with occasional promotional offers and discounts.

Comparatively high prices will be charged for the newly developed single cup brewing systems. Similarly

new products and health conscious products will be charged highly at the beginning.

Place The new products will be offered through the existing outlets. Additionally new speciality branches

will be opened and these too will be used to offer new speciality coffees.

Promotions For the single cup brewing systems launch campaign one page advertisements will be

carried out in selected magazines such as Rolling Stone, ESPN, Maxim, Lucky, Cosmo, US Weekly and

Entertainment Weekly. Along with this a selected few commercials will be launched.

People As the company is already an ethical and responsible employer, the staff are treated well. They

are given frequent trainings not only on Starbucks but also on the coffee industry in a broader

perspective. Additional training programs will be arranged for in-home/on-the-go brewing systems as well

as on the new products developed.

Processes Convenient processes (for ordering and other purposes) for customers will continue to be

adopted.

Physical evidence The ambience will continue to be maintained both in existing outlets and also when

designing and constructing the new specialty branches.

Action

A detailed action plan which includes a breakdown of activities, the responsible persons, time frames and

budgets to achieve above objectives will be outlined as an action plan or a Gantt chart.

Control

Suitable KPIs and other control measures are developed to monitor the progress of the particular

activities. Some of such KPIs are:

Number of new outlets opened per year

Number of new product ideas generated per year

Number of new products launched per year



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Starbucks Answer for Strategic Mgmt Case

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