Advance Marketing: Starbucks

This report provides an external analysis of Starbucks, including political, economic, social, technological, environmental, and legal factors. It also includes a competitive analysis, SWOT analysis, and positioning and segmentation approach. The report concludes with marketing objectives and a 5-year strategic plan for Starbucks.

Running Head: ADVANCE MARKETING
Starbucks
Advance marketing
Report
Student Name
[Pick the date]

ADVANCE MARKETING 1
Introduction
Starbucks came into existence in 1971 when three businessmen were engaged in the trade of
high-quality beans coffee. Soon they planned to expand their business in the form of serving
high-quality coffee under the name of Starbucks. The main aim of this business was to provide
end quality coffee to their potential customers in the form of product innovation as well as retail
expansion (Starbucks, 2019). This report also includes an external analysis of Starbucks as well
as the competitive forces which are acting on this company in this business world. In addition,
this report is also focused on SWOT analysis of this company. It is also including positioning
and segmentation approach of the company towards their potential customers. This report is also
focused on marketing objectives and 5-year strategic plan for Starbucks.
External Analysis
Political factors
This factor is mainly related to sourcing raw materials for product manufacturing. Business of
Starbucks is able to attract a lot of attention from various politicians with in the country set up.
Because of this factor, company is in need of adhere norms related to social and environmental
aspects. The company is willing to continue with their sourcing strategies because it gives
significant importance to fair trade practices (Haskova, 2015). In addition to this, companies
have to follow the rules and regulations related to the country in which they are operating for
buying their raw materials. Active political awareness in developed countries has increased the
importance of this political factor. At the same time company is also facing pressure from the
home market which has put Starbucks into great pressure related to their business operations
related to political stability with in the country.
Economic factors
This factor is related to going up and down in the economic situation of the business world
which has a direct impact on the growth of Starbucks. It is because these aspects are considered
as the drive factors for the profitability of Starbucks Company. These economic situations have
forced potential buyers to shift their choice towards low-cost alternatives but have not quit
buying coffee (Morais et al., 2015). This can be considered as one of the best opportunity for
Starbucks to place their product in current market in order to expand their business. In addition
to this, company has a lot of pressure to deal with an increase in labour and operating prices in
the current business environment. In this situation, company has to cut their profitability in order
to remain sustainable in the business market due to various factors such as variation in exchange
rates, economic environment in present market and level of taxes.

ADVANCE MARKETING 2
Social factors
These factors are mainly linked with the social impact of the business operations of the company.
It is not that Starbucks cannot provide low-cost products but at the same time, they have to
compromise with the quality. This issue is considered as one of the biggest challenges while
starting a new business in the current situation. At present Starbucks has the opportunity to
expand their customer base by including both lower and middle- income segment in their
customers. Now day’s people are moving towards herbal and green products which is a great
concern for Starbucks because it is impacting their brand image in the market (Bigley, 2018). In
addition, it has been seen that generation related to baby boomers are retiring which indicates a
decrease in the older customers. Company must be more focused towards Gen X and Millennials
related to their potential buyers. There are other social factors which impact the performance of
the Starbucks such as family size, changing preferences of customers, changing work outline as
well as lifestyle, level of education and changing values in the present populations.
Technology factors
At present, Starbucks is in the good position to take advantage of innovative mobile technology
and therefore they have a partnership with Apple Company to create applications which can offer
discount in order to attract more customers towards the company. In addition, company has
installed Wi-Fi connections in their all outlets in order to boost this strategy. This strategy helped
in encouraging customer to focus on their work while having a cup of coffee in their outlet ( Da
Costa Graciana et al., 2019). The company can make better use of innovative technology to
enhance their overall customer experience. This company has also introduced mobile payment as
a part of their business strategy. In addition to this, there are other technical factors which are
impacting the performance of the company are innovation in technology, development of
biotechnology development as well as advancement in agriculture.
Environmental factors
At present, almost every business is forced to move towards environment protection practices in
order to survive in the present business environment. Various outlets of Starbucks are involved
in activities which are associated with environmental protection or advocacy of environment
protection. It has been seen that even now customer is showing their concern related to
environment issue (Glass et al., 2019). Therefore every organization has to introduce
environment protection concern in their business strategy in order to gain the trust of the
customers. In addition to this, there are some environmental factors which have a direct impact
on the performance of the company such as environmental rules and regulations, impact of
environment disaster-related to agriculture along with rise in the global warming.

ADVANCE MARKETING 3
Legal factors
This factor is mainly linked with laws which every company has to follow in order to run their
business smoothly. In this situation, Starbuck has to focus that none of their action will violate
any of the country laws which can impact their overall business strategy especially in case of raw
material sourcing. In addition, company has to strictly pay attention towards caffeine production
along with consumption as per the setup policies by health regulatory bodies. In addition to this,
other factors which impact legal aspects such as laws related to custom and trades along with
licensing regulations.
Competitive analysis
Threat from new entry
It has been found that threat-related to new entry is moderate. Therefore neither barrier related to
its business is not too high nor is investment related to coffee brand not too high. But when it
comes to saturation this industry is a little bit moderate and allow new entry to compete with the
Starbucks (Mahat, 2019). With the help of brand identity, star bucks are able to capture a large
portion of market share in terms of infrastructure, quality, and competence. Coffee switching is
low but still, there are chances that new entry can attract customers on the base of price. Entry
threat is mainly linked with the brand image of the company in the business market in terms of
market share and brand loyalty.
Threat from substitute
When it comes to substitute products it has been seen that there are many products available in
the market right from juice to tea and from alcohol to non–alcoholic beverages in the market. In
addition, there are restaurants which offer both quality products along with good ambiance. At
present people are moving towards homemade products which are directly impacting the sales of
Starbucks (Baxter, 2019). Availability of switching cost has become one of the major challenges
for Star bucks. There are other factors which are impacting the performance of Starbucks such as
premium quality coffee, improved customer experience and so on.
Bargaining power of buyer
As per the study it has been found that bargaining power of customers in case of Starbucks is less
due to brand image and quality of their products. In addition to this, purchase amount related to
individual is small and therefore they are not in a situation of bargaining along with diverse
customer base (Reyes and Useche, 2019). In case of Starbucks, customers are usually sensitive
towards quality and are ready to pay price above than normal. But still, it is not ok because if the
customer will feel that they are being charged high they will surely prefer switching. Starbuck
also offers diverse product which lowers power of consumers.

ADVANCE MARKETING 4
Bargaining power of suppliers
In case of suppliers, it has been found that they are able to just put moderate pressure related to
Starbucks because this brand is using diverse policy while selecting their suppliers. In addition,
Starbucks is making use of ethical sourcing policy which offers them upper hand of suppliers.
This ethical policy is helping farmers directly to good control over supply chain which has
eliminated the chance of mediator (Ribek and Saraswati, 2019). This strategy has helped
Starbuck to maintain relatively moderate pressure on Starbucks. Starbucks has adopted a better
relationship with farmer community by educating them related to cocoa farming in order to
generate maximum profit.
Competitive rivalry
When it comes to industry rivalry, Starbuck is facing moderate to high competition because
competition is a kind of monopolistic approach in the industry along with higher number of firm
which directly impacting market share on the high range (Arroyo-Esquivel et al., 2019). In
addition to this, it has been found that entry and exit barrier related to this industry. Also,
Starbuck make use of high-quality product differentiation to edge competitors. Due to moderate
maturity rate in the industry, company is at moderate market share.
SWOT analysis
Strength
One of the major strength of Starbucks is its strong financial stability which helps the company
to remain at the top in the competition related to coffee and beverage retailers on the global level.
This company is valued at $4 billion which act as a competitive advantage for this company over
other companies (Lombardo, 2019). This company has been very successful in creating a better
brand image in the minds of their potential buyers related to quality and product excellence
which has ensured its dominance in the market of coffee industry.
Weakness
Company is completely dependent on their input resources such as coffee beans and therefore is
completely dependent on the price of coffee beans in order to generate revenue. It clearly
indicates that business of Starbuck is very price sensitive which fluctuates with the price of
coffee beans. In this situation, it is very important for Starbuck to diversify their business to
reduce risk in order to become independent (White, 2019). In addition, it has been found that
company is continuously being targeted by various social and environmental activists for
unethical procedures related to coffee beans. Report of violating fair coffee trade is also viral
related to Starbucks which has a negative impact on the image of the company.
Opportunity

ADVANCE MARKETING 5
At present company has the opportunity to spread its network related to suppliers in order to
create a diversified sourcing environment in the business market in order to attain control over
supplier bargaining (Avila, Parkin and Galoostian 2019). This will aid this company in becoming
less sensitive towards price fluctuation of coffee beans along with supply chain risk. In addition,
company has the opportunity to expand its business in emerging markets such as China and India
which has the largest population of the world.
Threat
There are some companies which are serving related products in the market and generating threat
like situation in the market such as Mc Donalds as Burger kings which are offering both qualities
as well as better ambiance. These are creating a separate customer base for these companies
which is a concern for their business (Rahardjo, Hasbullah and Taqi, 2019). Although company
has invested a lot of efforts to strengthen their position in the market but still facing issues
related to customer changing preferences. Growing sensitivity related to social and
environmental protection laws has a direct impact on the performance of the company due to
high release of carbon emission in the environment.
Positioning and segmentation
The key approach of Starbucks is to generate better market share in the industry by closely
focusing on market segmentation. This company is making use of both aspects demographic as
well as geographic segments such as gender, income, age along with zone and country related to
market size. It has been seen that demographic segmentation for Starbucks is the age range
between 25- 40 years with above-average income and other is the age group of 18- 24 years
which comes from rich family (Dudovskiy, 2017). Most of its customer belongs to generation Y.
While in psychographic segment company mainly focus towards upper-middle class as well as
well-off family belongings. This company operates on both mass marketing as well as segment
marketing in order to target their potential customers on the public form so that proper market
growth can be maintained. They have also applied this demographic and geographic
segmentation while selecting their store location as well as coffee lovers.
When target market is being set by Starbucks they try to develop a strategic position in the
market in order to occupy potential market. It is an approach by which Starbuck will be able to
position their product into the minds of the potential customers to set up a clear and distinctive
direction in their business operations (Ullah, 2019). They have just developed a unique market
position related to their product in order to keep them unique from others so that they can gain
the attention of their potential customers. The company has focused its strategy on product
quality in order to enjoy their product uniqueness in the business market related to the target
audience. In addition, this company is very successful in gaining an advantage over other
competitors related to target audience. This company has mainly used digital marketing strategy

ADVANCE MARKETING 6
to position brand image in the minds of the customer by influencing the potential customer that
coffee is only related to Starbucks along with maintaining high standards.
Marketing objectives along with five-year strategy
One of the major objectives of Starbuck is to attain major growth in coffee serving industry
along with high-profit revenue. Starbucks is able to maintain its success in the market for the
long term in order to dilute the market share of its competitors in the market (Kadic-Maglajlic
and Arslanagic-Kalajdzic, 2019). Second marketing objective of Starbuck is to offer affordable
price coffee to the middle-class family in order to expand their market business. Having a strong
customer base will ensure continuous sale of the organization for long terms which is directly
linked with the profit margin of the organization (Heo et al., 2019).
Starbucks five year strategic plan is to add on nearly 50% more stores in a different location in
order to increase their potential customer reach related to their new product, innovative
technology along with different stores. In addition, they want to focus on the growth of their
supply chain in the present business market (Whol, 2016). Soon company is going to add on
breakfast foods in the form of wheat-free with Tencent Holding Ltd. They are going to make use
of more social media in order to expand their customer reaches such as Wechat and Instagram
application. They are going to focus on China market by placing around 5000 shops to develop a
new customer base.
Conclusion
Growing coffee marketing at present world has forced the company to adopt unique strategies to
maintain their current position in the business market. Although Starks buck is one of the most
famous brands in the coffee industry but still it is receiving moderate competition from other
companies which are serving similar kind of products in the market. The company has to focus
on new opportunities which can help them in expanding their business on the global level. In
addition, company must introduce innovative technology to offer high-level quality experience to
the potential customers.

ADVANCE MARKETING 7
References
Arroyo-Esquivel, J., Sanchez, F. and Barboza, L.A. (2019) Infection model for analyzing
biological control of coffee rust using bacterial anti-fungal compounds. Mathematical
biosciences, 307, pp.13-24.
Avila, M., Parkin, H. and Galoostian S. (2019) $16.7 Million To Save One Reputation: How
Starbucks Responded Amidst a Racial Sensitivity Crisis. Pepperdine Journal of Communication
Research, 7(1), p.4.
Baxter, G. (2019) A Strategic Analysis of Cargolux Airlines International Position in the Global
Air Cargo Supply Chain Using Porter’s Five Forces Model. Infrastructures, 4(1), p.6.
Bigley, J. (2018) Assembling frameworks for strategic innovation enactment: Enhancing
transformational agility through situational scanning. Administrative Sciences, 8(3), p.37.
Da Costa Graciana, B., Ambarawati, I.G.A.A., Darmawan, D.P. and Budiasa, I.W. (2019) The
Nucleus-Estate and Smallholder Partnership towards Export Competitiveness of Timor Leste
Coffee. Modern Economy, 10(7), pp.1655-1670.
Dudovskiy, J. (2017) Starbucks segmentation, targeting and positioning [online]. Available
from: https://research-methodology.net/starbucks-segmentation-targeting-and-positioning-targeting-
premium-customers-with-quality-products-and-service/ [Accessed 2/9/19].
Glass, T.J., Twadell, S.L., Valmadrid, L.C. and Connor, N.P. (2019) Early impacts of modified
food consistency on oromotor outcomes in mouse models of Down syndrome. Physiology &
behavior, 199, pp.273-281.
Haskova, K. (2015) Starbucks Marketing Analysis. CRIS-Bulletin of the Centre for Research and
Interdisciplinary Study, 2015(1), pp.11-29.
Heo, J., Choi, K.S., Wang, S., Adhikari, K. and Lee, J. (2019) Cold Brew Coffee: Consumer
Acceptability and Characterization Using the Check-All-That-Apply (CATA)
Method. Foods, 8(8), p.344.
Kadić-Maglajlić, S. and Arslanagic-Kalajdzic, M. (2019) Internationalization of Bosnian black
coffee brand: bringing the traditional coffee experience to the world. Emerald Emerging Markets
Case Studies, 9(1), pp.1-24.
Lombardo, J. (2019) SWOT analysis of Starbucks [online]. Available from:
http://panmore.com/starbucks-coffee-swot-analysis [Accessed 2/9/19].
Mahat, M. (2019) The competitive forces that shape Australian medical education: An industry
analysis using Porter’s Five Forces Framework. International Journal of Educational
Management, 33(5), pp.1082-1093.

ADVANCE MARKETING 8
Morais, U.P., Pena, J., Shacket, K., Sintilus, L., Ruiz, R., Rivera, Y. and Mujtaba, B.G. (2014)
Managing diverse employees at Starbucks: Focusing on ethics and inclusion. International
Journal of Learning and Development, 4(3), p.35.
Rahardjo, B., Hasbullah, R. and Taqi, F.M. (2019) Coffee Shop Business Model
Analysis. Integrated Journal of Business and Economics, 3(2), pp.140-152.
Reyes, G.E. and Useche, A.J. (2019) Competitiveness, economic growth and human
development in Latin American and Caribbean countries 2006-2015: A performance and
correlation analysis. Competitiveness Review: An International Business Journal, 29(2), pp.139-
159.
Ribek, P.K. and Saraswati, N.P.A.S. (2019) civet coffee agro tourism attractions as a competitive
advantage strategy in improving marketing performance in bali. Jesya (Jurnal Ekonomi &
Ekonomi Syariah), 2(1), pp.158-168.
Starbucks. (2019) Our company [online]. Available from:
http://www.starbucks.in/about-us/company-information [Accessed 2/9/19].
Ullah, W. (2019) Marketing analysis of Starbucks [online]. Available from:
https://www.academia.edu/14896368/Marketing_Analyisis_of_Starbucks [Accessed 2/9/19].
White, W. (2019) Starbucks SWOT analysis [online]. Available from:
http://inevitablesteps.com/swot-analysis/starbucks-swot-analysis/ [Accessed 2/9/19].
Whol, J. (2016) Starbucks five year plan: Lot of stores, food and cold drinks [online]. Available
from: https://adage.com/article/cmo-strategy/starbucks-5-year-plan-lots-stores-food-cold-
drinks/307072 [Accessed 2/9/19].

ADVANCE MARKETING 9