Cloud Based Customer Relationship Management Marketing plan of Starbucks coffee shop

EXECUTIVE SUMMARY

This report looks at the Marketing plan of Starbucks coffee shop, and its contribution to the success of company. Formation of successful marketing plan is the key point for a company to gain the competitive advantage over its competitors. The marketing plan evaluates the strategies currently adopting by the company. But the main theme of this report is to focus mainly on company marketing strategies, such as SWOT Analysis, Ansoff Growth Matrix, Boston Consulting Group Matrix, 4’s, company’ short term goals, objectives, and how it can be successful in the future.

COMPANY’S INTRODUCTION:

Starbucks Corporation is a dominant multinational coffee and coffeehouse chain company based in the United States. Starbucks is the largest coffeehouse company in the world with 8,505 company-owned and 6,505 licensed stores in 42 countries, making a total of 15,011 stores worldwide. Starbucks sells drip brewed coffee, espresso-based hot drink, fruit bottled, coupled with sandwiches, pastries, snacks, salads, soups, other hot and cold drink.

Core competency of star bucks: To summarize, Starbucks has a high reputation for quality because of the following:

The company goes to extreme lengths to buy the very finest Arabica coffees available on world markets, regardless of price.

The company’s freshness and quality are legendary. Beans that are held in bins for more than a week are donated to charity.

Every piece of coffee-brewing equipment that is sold has been tested and evaluated.

Each Starbucks employee is extensively trained to ensure that customers receive knowledgeable service.

Mission Statement:

“To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow”. The following six Guideline Principles will help us measure the appropriateness of our decisions:

Provide a great work environment and treat each other with respect and dignity.

Embrace diversity as an essential component in the way we do business.

Apply the highest standard of excellence to the purchasing roasting and fresh delivery of our customer.

Develop enthusiastically satisfied customer all of the time.

Contribute positively to our communities and our environment.

Recognize that profitability is essential to our future success.

Starbucks has the following core values:

Provide a great work environment and treat each other with respect and dignity.

Embrace diversity as an essential component in the way we do business.

Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.

Develop enthusiastically satisfied customers all of the time.

Contribute positively to our communities and our environment.

Market Demographics:

The profile for the starbucks customer consists of the following geographic, demographic, and behavior factors:

Geographic: The geographic survey may include the identification of total number of population, in society and total number of target customer in which you are operating (Lanchester, Massingham, & Ashford 2002).

The immediate geographic target market for starbucks is the total population of the UK which is 60,776,238 approximately.

The specific targeted market of Starbucks is mostly the students of schools, colleges, and universities.

Demographics:

Male and female.

Age below 40. This age range draws off a combination of university students and locals within the society.

Have (or are getting) a college education and some with graduate degrees.

An income over £457 per week (except the students who earn far less but have a decent amount of disposable income).

Non-conventional customers.

Psychographic:

The people who want to enjoy a totally different coffee experience, they go to starbucks as it is positioned a completely different coffee shop.

MARKET NEEDS:

Starbucks is providing with a wide range of high quality coffee and snacks options to their customer. Starbucks seeks to fulfill the following benefits that are important to their customers:

Selection:

A wide range of coffee and snacks options that is unavailable at the larger, dominant coffee chains.

Accessibility:

Almost all types of coffee are available from starbucks centrally located storefront.

Customer service:

The patron will be impressed with the level of attention that they receive.

Competitive pricing:

Prices of all range of coffee and other stuff will be priced competitively relative to the competition.

SITUATION ANALYSIS OF STARBUCKS:

The company situation analysis is used at the business level to determine the strategic issues and problems that need to be addressed through the next three steps of the strategic planning process.

Starbucks has own very good different kinds of strength to dominant in this industry make it to differentiate to others one in this market. This are the strength, those help starbucks to achieve their targets and desire goals. These are the stratbucks some important characteristics or strengths.

STRENGHTS:

Strong Brand Recognition

Large retail distribution system

Quality product

Extensive product list

Good supplier relationship

Strong financial history

Strong human resources

WEAKNESSES:

Even though starbucks posses a number of strengths but it also has some weakness too. starbucks needs to overcome on and deal them for remaining the top position in this competitive market.

These are the s following list of starbucks weaknesses:

Dependence on single source of business income

Prices high relative to competition

Strong dependence on suppliers

Merchandise sales in stores

SWOT ANALYSIS FRAMEWORK

OPPORTUNITIES:

It is a fact that every company who enter in the market must has different kind of opportunities prevail in market. This is the important, how to recognize and make to strategy to acquire them, acquiring these opportunities is called success of company .

Starbucks can more successes in market if they will be able to act upon theses opportunities accordingly.

The following new opportunities can help starbucks to success more in the future in the way of their business.

Expansion into overseas markets

Expansion into untapped U.K and worldwide markets

Expansion of brand name into new products or business lines

THREATS:

Nobody knows about tomorrow. Especially for nowadays circumstances, world is changing dramatically. Some new threats are prevailing in the market with full swing of their effectiveness. Despite the fact of strong position of strabucks in the market, he still need to keep eye on these threat get strong positioning and branding.

These are the list of some very common internally and externally threats.

Economic conditions may make consumers unwilling to pay high prices

Political conditions abroad may limit expansion

Increasing competition in coffee market

May be reaching saturation point in some U.S markets

Increase prices of raw material for coffee and other stuff

BOSTON CONSULTING GROUP (BCG) MATRIX:

The Boston consulting Group’s growth-share matrix, developed in the early 1970s, probably became the most popular management technique ever.

The vertical dimension is th growth rate of the market, which is used by the BCG as a proxy variable for market attractiveness. High-Growth markets are assumed to be more attractive because, being competitively non zero sum, market share gains are often more easily obtained. Also market share gains in a growth market will be worth more in the future as the market develops. The midpoint between high and low market gtowth is

In the BCG matrix, star quadrant is the most dominant place where the companies enjoy the high market growth and high market share. That’s why every company wants to stay in star quadrant. As STARBUCKS coffee shop is the renowned coffee chain in the world, that’s why it clearly lies in the (STAR QUADRANT ‘High Growth + High Share’) because the annual sales of the company in last financial year 2007 are US $ 9.411 Million, moreover the coffee shop enjoying the highest market share as well in the coffee industry.

ANSOFF’S GROWTH MATRIX:

The product-market matrix proposed by ANSOFF, provides a useful framework for considering the relationship between strategic direction, and marketing strategy (Brassington & Pettitt 2006).

The four-cell matrix shown in the figure considering various combinations of product-market options. Each cell in the Ansoff Matrix presents distinct opportunities, threats, resources, requirements, return and risks.

“Market expansions means selling more of the existing products to new markets, which could be based on new geographic segments or could be created by opening up other new segments such as age, product, usage, lifestyle or any other segmentation variables” (Brassington & Pettitt 2006 p 955).

In the ANSOFF growth matrix, the STARBUCKS coffee shop lies in the (MARKET EXPENSION Existing Product + New Market), because company is making very good profit in almost every coffee shop in different location of the world. Expending its coffee market in Middle East, and Asia could be very helpful for the company’s profit because there is huge potential for the coffee market as there is no famous coffee shops in that part of the world. Just like recently they have opened their two coffee shops, one in China and other is in Kuwait.

MARKETING MIX STRATEGY FOR STARBUCKS: “In order to make appropriate strategies for gaining customers’ preferences and their loyalty, we need to understand as to how STARBUCKS Marketing Mix or 4 Ps have enabled the company to achieve superior customer satisfaction, and also in building a long-term relationship with its customers. “The issue is not whether there should be four, six, or ten P’s so much as what framework is most helpful in designing marketing strategy. Just as economics use two principals concepts for their framework of analysis, namely Demand, and Supply. The marketers see the four P’s as a filing cabinet of tools that could guide their marketing planning” (Philip Kotler, 1999 p 96).

Following are the some recommendations for STARBUCKS in relation with marketing mix:

Frame Work of marketing Mix

PRODUCT:

Typically, the marketing mix stars with product “p”. the heart of the marketing mix, the starting point is the product offering and product strategy. It is hard to design a place strategy, decide on a promotion campaign, or set a price without knowing the product to be marketed.

The product includes not only the physical unit but also its package, warranty, after-sale service, brand name, company image value, and many other factors. A Starbucks coffee has many product elements: the chocolate itself, a fancy gold wrapper, a customer satisfaction guarantee, and the prestige of the Starbucks coffee brand name. We buy things not only for what they do (benefits) but also for what they mean to us (status, quality, or reputation).

Products can be tangible goods such as computers, ideas like those offered by a consultant, or services such as medical care. Products should also offer customer value.

Decision that address the new product development process(innovation management), licensing strategies with potential partners, intellectual property rights, services provided to augment the revenue stream from base products product name/brand decisions ,development of complementary products by partners, creation of industry standards, packaging, and so forth, the critical need is to develop a stream of products with the right set of features to satisfy customer needs in a compelling yet simple fashion.( jakki j. Mohr, Sanjit Sengupta, Stanley Slater,2000, p7)

In Starbucks they made purely their products to satisfying the needs of the customer, and they made coffee with the finest coffee ingredients of the world. The different range of coffee and snacks offered by STARBUCKS are as follow:

ESPRESSO:

Coffee Latte

Cappuccino

Vanilla Latte

Coffee Americano

Espresso

COFFEE HOUSE FAVOURITES

Caramel Hot Chocolate

Coffee Misto

Classic Hot Chocolate

Signature Hot Chocolate

Freshly Brewed coffee

FRAPPUCCINO:

Cinnamon Dolce

Java Chip

Espresso

Coffee

Caramel

SPRING FAVOURITES:

Cinnamon Dolce Latte

Caramel Macchiato

PRICE: decisions that establish price points for the company products, and address issues related cost to produce/manufacturer the good, margins along the distribution channel, competitors prices (pricing relative to a specific firm market position), customer value, total cost of ownership for the customer, price for product bundles, and profitability.( .( jakki j. Mohr, Sanjit Sengupta, Stanley Slater,2000, p8 ).

Price is the only element of the marketing mix that produces revenue, As such; it serves a tactical as well as an economic role for an organization 9Holloway and Robison 1995). The price charged sends many signals about the likely value of the product being offered and, as such, must be commensurate with the quality of experience,

Starbucks’s product prices are relative high than others, because they target those people of society who give the preference on quantity. Following are the some prices of STARBUCKS famous products:

ESPRESSO: Tall Grande Vent

Coffee Latte £2.05p £2.40p £2.65p

Cappuccino £2.05p £2.40p £2.65p

Vanilla Latte £2.35 £2.70p £2.95p

Coffee Americano £1.75p £1.90p £2.05p

Espresso £1.20p £1.40p £1.55p

COFFEE HOUSE FAVOURITES

Caramel Hot Chocolate £2.90p £3.25p £3.50p

Coffee Misto £1.95p £2.35p £2.55p

Classic Hot Chocolate £2.20p £2.50p £2.80p

Signature Hot Chocolate £2.65p £3.00p £3.25p

Freshly Brewed coffee £1.65p £1.75p £1.90p

FRAPPUCCINO:

Cinnamon Dolce £3.05p £3.25p £3.45p

Java Chip £3.05p £3.25p £3.45p

Espresso £2.65p £2.85p £3.05p

Coffee £2.50p £2.70p £2.90p

Caramel £3.05p £3.25p £3.45p

SPRING FAVOURITES:

Cinnamon Dolce Latte £2.70p £3.05P £3.30P

Caramel Macchiato £2.70P £3.05P £3.30P

PLACE:

Place, or distribution, strategies are concerned with making products available when and where customers want them. Would you rather buy a kiwi fruit at the 24-hour grocery store within walking distance or fly to Australia to pick your own, which involves all the business activates concerned with storing and transporting raw material or finished product. The goal is to make sure products arrive in usable condition at designated places when needed.

For consumer goods the most visible player in the channel of distribution is retailer. Manufacturers and consumer alike have to put a lot of trust in the retailer to do justice to the product, to maintain stock, and to provide a satisfying purchasing experience. Retailer face the many of the same marketing decisions as other type of organization, and use the same marketing mix tools, but with a slightly different respective. They also face unique marketing problems for examples, store location, layout and the creation of store image and atmosphere. “Every seller must decide deeply that how to make its products available to the target market with an easy access” (Philip Kotler, 1999 p 103).

Now in case of Starbucks they mainly build their stores in the prime location of the city where they can easily attracts their desired customers who really want to enjoy the taste of coffee. Just like in UK they build their stores mainly in the shopping malls and town centers. Now it is the need of the time that they should be concentrate to open their stores in Middle East and Asia.

PROMOTION: “Promotion includes advertising, public relations, sales promotion, and personal selling. Promotion’s role in the marketing mix is to bring about mutually satisfying exchanges with target markets by informing, education, persuading, and reminding them of the benefits of an organization or a product. A good promotion strategy, like using the Dilbert character in national promotion strategy for office Depot, can dramatically increase sales. Good promotion strategies do not guarantee success, however, despite massive promotional campaigns, the movies, The Alamo and The Lady-killers had disappointing box-office return. Each element of the promotion “p” is coordinated and managed with the others to create coordinated and managed with others to create a promotional blend or mix. These

Starbucks nearly spends £4.7 million every year for promotions. It is include the cost of print media, electronic media, indoor, outdoor media etc.

The company’s latest stunning plan is the Starbucks Card. You buy a re-chargeable card in the UK which can be used at coffee bars in the US, Canada, Australia and Thailand. The card will enhance the Starbucks experience for customers allowing them to buy their daily cup of coffee quickly and easily, even when they are not carrying cash.

Recently company through an agreement between Starbucks, and T-Mobile the two companies have come up with a way to provide internet access at Starbucks location and high speed broadband for Starbucks customers as well. In addition, T-Mobile hot spot customers get to use the Starbucks stores as they do now. Moreover Starbucks spends millions of dollars internationally to protect the environment and global warming.

DIVERCIFICATION: “The major reason for a business adopting a strategy of diversification is therefore to allow it to reduce its dependence upon a single market area” (W. Stewart Howe 1986 p 153). At a general strategic level Ansoff suggests three reasons why firms diversify. First, their objectives cannot be achieved by continuing to operate in their existing markets. Thus, since continued operation in these markets is not able to diversify the profit, risk or growth objectives of the business, achievement of these must be sought in new market areas. Second, where a business has excess financial resources beyond those necessary to satisfy its expansion plan in its existing markets, then rather than retain these resources in liquid form of business may invest them in new markets areas. Third, if greater opportunities are presented to the firm in new market areas than accrue from its existing activities. Then a diversification program may be undertaken to benefit from these. There are two types of diversifications:

RELATED DIVERSIFICATION

UN-RELATED DIVERSICATION

RELATED DIVERSIFICATION: Expending combining with firms in different, but related industry that are “Strategic Fits”.

UNRELATED DIVERSIFICATION: Growing by combining with firms in un-related industries, where higher financial returns are possible.

Now, if Starbucks want to diversify its business outside the industry, then the company should start a totally new business that is not from the same industry. For example Starbucks is a coffee shop, if they enter in the manufacturing business and start making cars, bikes etc that will be the perfect example of diversification. But the main focus of the Starbucks should be on their strategic business unit which is coffee shop. If they want to diversify their business within the same industry i.e. related diversification, then the Starbucks should combine their business with their competitors to launch new products.

INTERNATIONAL BUSINESS DEVELOPMENT STRATEGIES:

“The franchiser/licenser remembers to provide a standard package of components, or ingredients together with management and marketing services, and advice. Since franchising involves the transfer of tangible, it can enable greater control of the operation for the originating manufacturer than licensing” (Lancaster & Massingham & Ashford 2002 p 437). Starbucks currently use three strategies for business in overseas. These strategies are as follow:

1: Joint ventures

2: Licenses

3: Company-Owned Operations.

Mainly the company uses the company-owned shops for the business in other countries.

RECOMMENDATION FOR FUTURE MARKETING PLAN OF STARBUCKS (3 YEARS):

By analyzing the above whole information such as Swot analysis, Ansoff analysis, BCG matrix, marketing mix, following should be the primary objectives of the marketing plan of Starbucks coffee shop for next 3 years:

GOALS OR OBJECTIVES:

Sales should be increased by 15 to 20% at least.

In order to get increased sales, they should increase Gross Profit margin by 25%.

Find more new markets especially in Middle East, and Asia.

More strengthen their position as a worldwide coffee shop leader.

Increase marketing budget by 15%

In order to achieve the above future objectives, the Starbucks coffee shop should follow instructions:

MAINTAIN SUSTAINABLE COMPETITIVE ADVANTAGE:

The Starbucks coffee shop should maintain the competitive advantage that it has got over other coffee shops. In order to maintain leading position in the coffee market, the Starbucks should introduce innovative products after good intervals.

NEW TARGER MARKETS:

To maintain the top position in the coffee market, Starbucks should go and find some new coffee potential market. Just like there is great potential of new coffee shop especially in Asia, and Middle East, as there is no famous coffee shop. Where they can capture in new market, and got some handsome profit as well.

INTRODUCE SOME NEW PROMOTIONS:

As Starbucks introduced a stunning promotion plan that is Starbucks re-chargeable card for purchasing coffee whether you have money or not at that time. Just like that company should develop a membership card especially for the students. Some discount should be offer to regular customer, and student to increase the retainment.

INTRODUCE SOME INNOVATIVE PRODUCTS:

To maintain the dominant position in the coffee market, it is necessary for the Starbucks that, they should introduce some really innovative products after good intervals. The induction of new products creates the brand loyalty among the customers.

INCREASE MARKETING BUDGET:

Marketing department is the one of the most important part of every company. This department is responsible for increasing sales. So in order to get more revenues, the company should increase the budget of marketing. Moreover they should include some world famous celebrities, conducting promotions events, seminars things like that for promotions their products.

DIVERCIFY THE BUSINESS:

To maintain the leading position in the coffee market, the Starbucks should go for diversification. Diversify the business in product-related items, or unrelated items to increase their revenues.

IMPROVE THE PRODUCT QUALITY:

To maintain the superb quality and taste of different products in Starbucks, the company should adopt the Total Quality Management tool, which means improve the product’s quality until the perfection, and there is no defect on product or zero defect products.

EMPLOYEES MOTIVATIONS:

Employee’s motivation is very important for every organization to get good profit, and in order to maintain its position in the market. Good pay, and reward system is the best tool to motivate the employees. So Starbucks should try to give good pay and benefits to their employees during the job.

EMPLOYEES TRAINING AND DEVELOPMENT:

Training and development of employees is an important task for the management in order to enhance the progress of company, and increase the sales, and produce the error free services.