Marketing Strategy Development for Starbucks

This paper analyzes the marketing strategy of Starbucks, including a SWOT analysis of the company, analysis of 5Cs, and recommendations for future strategy. The paper also includes information on the company's customers, collaborators, competitors, and context.

Running head: Marketing strategy development
Marketing strategy development
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1Marketing strategy development
Table of Contents
1. Introduction..............................................................................................................................2
1.1 Overview of the company......................................................................................................2
1.2 Vision and mission statement...........................................................................................3
2. Analysis of 5Cs........................................................................................................................4
2.1 Company................................................................................................................................4
2.2 Customers..............................................................................................................................7
2.3 Collaborators..........................................................................................................................7
2.4 Competitors............................................................................................................................8
2.5 Context...................................................................................................................................8
3. Collection of information.........................................................................................................9
3.1 What customers want?...........................................................................................................9
3.2 Which competitors pose a threat?..........................................................................................9
3.3 How the context of business is changing, if at all?..............................................................10
3.4 What role collaborators play in the process?.......................................................................10
4. Developing marketing strategy..............................................................................................10
4.1 Recommendation and justification......................................................................................10
5. Developing marketing tactics.................................................................................................11
5.1 Marketing mix.....................................................................................................................11
References......................................................................................................................................13

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3Marketing strategy development
1. Introduction
Marketing plays a major role for strategy development of a business. Hence, strategy
developers or marketers give immense importance to the marketing and set a strategy in order to
carry out an effective marketing process. It is largely considered that effective marketing
determines the growth of a business (Kotabe & Helsen 2017). Thus, shedding light on the
importance marketing the paper will carry out an analysis on the business of the giant coffee
house Starbucks. The paper will start the discussion by giving a brief overview of the company
along with the value statement of the company. The further discussion elaborates on the essential
5Cs of Starbucks inclusive of company, customers, collaborators, competitors and context. In
order to carry out the analysis in a more integrated manner the study sheds light on the process of
the company’s information collection. In order to carry out the discussion in a more integrated
manner, the study will discuss the process through which the company research and collect
information on the customer requirement, market development and other aspects. The paper will
discuss on the future strategy of the company while suggesting a potential market for the
organization. Towards the conclusion, the study extends the recommendation along with a
marketing mix. Finally, the paper concludes with summarization of the whole discussion.
1.1 Overview of the company
Established in the year of 1971, sat bucks is the giant coffee chain house in the café
industry. The company opened its first outlet in the United States of America. Hence, the
business of Starbucks is based in United States. Starbucks opened its first outlet at Seattle’s
Western Avenue and then shifted in Pike Place (Starbucks Coffee Company 2018). Around the
year of 1996, the company started its business outside of United States in the year of 1996,

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started from Tokyo and then in Philippines and Mexico (Starbucks: international and U.S. stores
2017 | Statistic 2018). During the time of later half of 1990s, the company started offering
eateries in addition to coffee and made its hold over the international market more strongly
(Annual reports 2018). The company presently has coffee shops all over the globe with 20891
stores. Starbucks thus with its strong business network all over the globe has achieved the
leading position in the café industry not only in the United States of America but across the
whole world. Starbucks is mainly for its premium quality of coffee which is offered at a
premium price range.
1.2 Vision and mission statement
The giant coffee house Starbucks is focused on delivering quality products to its
customers. The mission statement: “To inspire and nurture the human spirit – one person, one
cup and one neighborhood at a time” (Starbucks Coffee Company 2018). This implies that
Starbucks aims to make a customer visit to their retail outlet an experience rather than serving of
great coffee. The aim of the company is not only to focus on serving of quality product but also
the quality service so that customers will be inspired to visit their café again. As mentioned in the
mission statement, the coffee house’s aim is to bring innovation in the growth process of the
company while meeting customer expectation. In addition, the vision statement of the Starbucks
Coffee suggests that the company offers finest coffee and premium purveyance, sustainable
growth and uncompromising principles as implied by “to establish Starbucks as the premier
purveyor of the finest coffee in the world while maintaining our uncompromising principles
while we grow” (Starbucks Coffee Company 2018).

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2. Analysis of 5Cs
2.1 Company
In order to understand the business process of the company a SWOT analysis will be
conducted which will include four major aspects such as strength, weakness, opportunities and
threats.
Strength
The Company over the years has achieved a strong brand image which is considered to
be one of the major strength of the company. Starbucks coffee house holds the leading position
in the café industry as it offers premium coffee to the customers (Starbucks Coffee Company
2018). Starbucks has more than 13000 retail outlets in all over the world which denotes that the
company has a strong business network (Starbucks: international and U.S. stores 2017 | Statistic
2018). Every metro city around the world has retail outlets of Starbucks thus the company
attempts to reach out to a wide range of customer base. The other strength of the company
includes premium products offered by the coffee house (Annual reports 2018). Starbucks offers
the finest coffee to the customers for which the company has been able to maintain its brand
image of premium coffee house among the coffee houses in Australia. Keeping the health trend
in mind as people around the world is shifting towards the consumption of low calorie food,
Starbucks has modified its product assuring that the coffees offered by the company contain less
calories (Starbucks Coffee Company 2018). One of the best selling products of Starbucks is Café
Misto which contains averagely 63 calories whereas Chai Tea Latte contains 103 calories
(Martinroll.com 2018). Americano is another product that deserves mention as it contains the
least amount of calorie.

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Weakness
The major weakness of Starbucks is the competition among the coffee houses in the café
industry. The major coffeehouses like Costa Coffee, Café Coffee Day, McDonalds McCafe and
Dunkin Donuts (Business Insider 2018). All these coffee houses offers coffee at a lower price
range that Starbucks. While Starbucks offers Café latte at $2.95, Costa Coffee’s one Flat white
(primo) costs only $2.40 (Starbucks Coffee Company 2018). Hence, it can be interpreted that by
adopting a low price strategy the rival companies of Starbucks try to hold the grip over the
customer base in the café industry. This can be considered as the major weakness since most of
the people tend to shift to the companies that offer low price strategy (Business Insider 2018).
The immitability of the product of Starbucks is extremely high since coffee is very common
drink and mostly all the cafes use same composition while making coffee. Hence, the there is
hardly any major difference between the product range of Starbucks and the product range of
rival companies (Susanty and Kenny 2015). The product range of the company is a much
generalized one, for example, the product range of Starbucks contains a variety of coffee,
pastries and snacks which is quite similar with the product range of other coffee houses
(Starbucks Coffee Company 2018). However, the major weakness of Starbucks is its high price.
Opportunities
Since Starbucks deals in the food and beverage industry, the company needs to focus on
more in the developing countries mainly over the countries of Africa and Middle East. The Asian
countries should be on the focus for the purpose of business expansion. As per Susanty and
Kenny (2015), the business of Starbucks in Australian country is already established as the retail
outlets of the company is spread among the entire Australia, thus the company must focus on the

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countries that have least number retail outlets as compared with United States of America and
Australia (Jaffee 2014). Huge opportunities are there if the company make ally with other
companies in the food and beverage industry in order to bring diversification in the product
development (Thurston, Morris and Steiman 2013). For example, Starbucks can introduce combo
offers of Starbucks coffee and McDonald’s burgers or fries so that McDonald’s customer base
can also be targeted by Starbucks. Apart from that, the Starbucks can also take strategies in the
product diversification of the company (Jaffee 2014). For instance, Starbucks menu can include
more types of snacks and beverages different from the existing product range.
Threats
The biggest threat to Starbucks is the high competition in the café industry. The café
industry of Australia is highly competitive as it is dominated by major coffee houses such as
Costa Coffee, Café Coffee Day and so on adopt different strategies in order to compete with each
other (Tucker 2017). Most of the companies adopt the strategy of low price since people tend to
shift towards lower price. Most of the giant coffee houses in the café industry compete with each
other in selling the products at lower price range in an attempt to increase the sales margin of the
product (Harith, Ting and Zakaria 2014). Thus, in order to gain competitive advantages the rival
companies introduce several offers and discounts to the companies. On the other hand, the threat
of new entrants in the industry is considerably high since food and beverage industry is one of
the industries that generate a considerable amount of revenue to the economy of the Australia
(Chen and Hu 2013). Over the last five years the growth of new entrants in the Australian café
industry was by 12% (Chen and Hu 2013). Hence it can be stated that the company must adopt
some measures in order to address the above mentioned issues. The major coffeehouses like
Costa Coffee, Café Coffee Day, McDonalds McCafe and Dunkin Donuts. All these coffee

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houses offers coffee at a lower price range that Starbucks. While Starbucks offers Café latte at
$2.95, Costa Coffee’s one Flat white (primo) costs only $2.40 (Mason, Cole and Goza 2017).
2.2 Customers
The customer base of Starbucks comprises people of all ages. However, the people of
affluent class of society are the major customer base since the company offers a premium price
range. The company mainly focuses in order to attract the customers of all ages (Martinroll.com
2018). Hence 49% customers of the company belongs to people of 25-40 years old, 40%
customers belongs to the age group of 18-24 years and 2% customers belongs to the age group of
13-17 years. Meanwhile, gender wise Starbucks offers its products to both male and female
customers (Susanty and Kenny 2015). However, the major customer of the company is occupied
by the professional individual who can spend a considerable amount of money purchasing the
premium products of the company in a regular manner. Hence, it will be right to state that
corporate officials are the main target customer base of the company (Starbucks Coffee
Company 2018). Starbucks holds 33% market share from Australia. In order to meet the
customer satisfaction of all over the world, the company sets its product range based on the
geographical variables (Martinroll.com 2018). For example, the Asian people are offered
products according to their taste which differ when the company sets the product of range for
European people.
2.3 Collaborators
The collaborators of the company include suppliers, distributors and partners. There are
five key suppliers that proved different products to Starbucks. While Regency and First Capital
Realty provides land lease to Starbucks, Dean Foods Company provides milk to Starbucks
(Susanty and Kenny 2015). The milk provided by Dean Foods Company is premium quality milk

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which is free from the bovine growth hormone. Meanwhile Inventure Foods provides the best
Frozen Coffee Blends to Starbucks (Chen and Hu 2013). Tingyi Cayman Islands Holding
Corporation on the other hand manufactures as well as markets the ready to drink products of
Starbucks. In addition to that, in order to increase the sales growth of the company Starbucks has
partnered with several companies (Forbes.com 2018). For example, the tie up of the company
with Pumpkin Spice Chai Tea Latte deserves mention. Apart from that, in order to make the
marketing and promotion more effective the company has partnered with the University of
Washington, Seattle Seahawks, Seattle Sounders FC, Seattle Theatre Group, Seafair, Seattle
International Film Festival, Upstream and so on (Martinroll.com 2018).
2.4 Competitors
Most of the coffee houses of Australian café industry adopt the strategy of low price as
customer tends to shift towards the coffee houses who offer products at lower price range . The
café industry of Australia is highly competitive as it is pre dominated by major coffee houses
such as Costa Coffee, Café Coffee Day and other coffee houses adopt different strategies in order
to compete with each other (Business Insider 2018). Most of the giant coffee houses in the café
industry compete with each other in several ways. The most common is the selling of products at
lower price range so that the sales margin of the products can be increased. Thus, in order to
remain ahead in the competition, the rival companies introduce several offers and discounts to
the companies (Chen and Hu 2013). On the other hand, the threat of new entrants in the industry
is considerably high since food and beverage industry is one of the industries that generate a
considerable amount of revenue to the economy of the Australia. Over the last five years the
growth of new entrants in the Australian café industry was by 12% (ZHANG 2014). Hence it can

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be stated that the company must adopt some measures in order to address the above mentioned
issues.
2.5 Context
Apart from high competition in the market, the major factors that affect the company are
political factors. Since the company is spread all over the world, all the directives of each
country’s government impact the company. However the rules and regulation of Food and
Beverage Association impacts on the company most. Several issues like presence of
preservatives or presence of caffeine in high amount had been reported in many news articles
putting the brand image of the company into crisis (Mason, Cole and Goza 2017). These issues
drew attention of FDA regarding the quality of the products that offered by the company. Hence,
political factors impact a lot on the company’s business process as well as growth of the
company in a considerable manner (Thurston, Morris and Steiman, 2013). The governmental
rules and regulation differ country wise. For example, the trade laws, import and export charges
and other aspects are different in China than India. Hence these aspects demand the company to
act in accordance with the political environment of the countries in which the company deals in.
3. Collection of information
3.1 What customers want?
Starbucks collect feedback from the customers in a routine manner. The official website
of the company gives an option to the customers where they can interact with the customer agent
of the company and can give suggestion in order to improve the service or products of the
company (ZHANG 2014). Meanwhile the social media page of the company over Facebook,

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Twitter and Instagram gives immense opportunities to the customers so that they can connect to
the person on behalf of the company (Chua and Banerjee 2013).
3.2 Which competitors pose a threat?
According to the market overview, the major competitor of Starbucks is Costa Coffee.
Costa coffee offers similar product range to the customers of coffee industry in Australia with a
low price range. Since the price range of Costa coffee is low a major customer shift towards
Costa Coffee from Starbucks is seen (Business Insider 2018).
3.3 How the context of business is changing, if at all?
The café industry of Australia is being changed over the years since the major coffee
lover are the teenage people who are mainly student (Chen and Hu 2013). Since the major
portion of coffee lovers belong to the age group of 17-15 age, they do not poses adequate amount
of money purchase the products of Starbucks that are of premium product range (Thurston,
Morris and Steiman 2013). Hence, they prefer to local cafes that are new and have low price
range. Thus a customer diversion from popular coffee houses to newly opened coffee houses is
largely seen as the change in the café industry of Australia.
3.4 What role collaborators play in the process?
In the whole process of information collection, the collaborator like Tingyi Cayman
Islands Holding Corporation who manufactures as well as markets the ready to drink products of
Starbucks play a significant role since it makes direct contact with the customers and the other
suppliers (Chua and Banerjee 2013). Thus, it can be said that the collaborators also play a
significant role in collecting the information regarding customers, market requirement and so on.

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4. Developing marketing strategy
4.1 Recommendation and justification
A choice of target market/s
Starbucks has less number of retail outlets in the developing countries since the
developing countries mainly over the countries of Africa and Middle East. The Asian countries
should be on the focus for the purpose of business expansion (Graham 2008). The business of
Starbucks in Australian country is already established as the retail outlets of the company is
spread among the entire Australia, thus the company must focus on the countries that have least
number retail outlets as compared with United States of America and Australia.
A value proposition for the target market/s
The business of Starbucks in Australian country is already established as the retail outlets
of the company is spread among the entire Australia, thus the company must focus on the
countries that have least number retail outlets as compared with United States of America and
Australia.
A positioning statement for the target market/s
In order to develop strategies for the target market, the company must make available the
products over online food applications and the official websites in order to increase the product
sale of the company.

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5. Developing marketing tactics
5.1 Marketing mix
Promotions
Initially, the promotional campaign will long for a time span of 8 months. It will include
both traditional way of marketing and social media marketing (Miller 2018).
Places
More retail outlets will be developed in the metro cities as well as over mobile
application and the official stores of the company (Kotabe & Helsen 2017). Apart from the metro
cities, retail outlets will developed in major cities in the countries of Middle East and Africa.
Products
The product will be designed according to the taste of the people of Africa, Asia and
Middle East. However the signature dishes like Frappuccino, tea, pastry, smoothies and
merchandises will exist in the product range (Thurston, Morris and Steiman 2013).
Price
The price will be set according the buyer power of the people of target areas. For
example, the buying capacity of people of Australian people is less than that of Asian countries
(Jaffee 2014). The cost of brewed coffee will be less than its price in Australia which is $1.95.

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