Marketing Strategy Development and Implementation for Starbucks

This paper studies the marketing strategy and implementation tactics of Starbucks. It highlights issues with the marketing tactics of the company and provides recommendations for improvement.

Running head: FINAL PROJECT REPORT
Marketing strategy development and implementation for Starbucks
Name of the student
Name of the university

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Executive summary
The aim of this paper is to study the marketing strategy and implementation tactics of
Starbucks. Starbucks is at present one of the most popular coffee brands in the world at
present. The paper attempts to study the marketing strategy of Starbucks and also
highlights issues with the marketing tactics of the company. The paper is divided into
five chapters. The first chapter introduces the topic and provides a background of the
company that the paper will analyze. The second chapter will study existing literature on
the topic, so as to gain better understanding of the involved concepts and theories. The
third chapter presents the research method and the research philosophy which will be
used to carry out the research. The fourth chapter is data collection, which lists how the
data will be collected and analyzed. A presentation of findings has also been provided.
Finally, the paper concludes by presenting a number of recommendations for Starbucks
to improve its marketing strategy and implementation.

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Table of Contents
1. Introduction.............................................................................................................................. 3
1.1 Background........................................................................................................................ 3
1.2 Project topic....................................................................................................................... 3
1.3 Purpose of the research.....................................................................................................4
1.4 Literature review................................................................................................................4
1.5 Research method............................................................................................................... 4
1.6 Data collection and analysis...............................................................................................4
2. Literature review...................................................................................................................... 5
2.1 Background of marketing strategy and implementation......................................................5
2.2 Importance of competitive advantage and positioning........................................................7
2.3 Importance of marketing mix in the present context...........................................................9
3. Research methodology..........................................................................................................10
3.1 Research method............................................................................................................. 10
3.2 Data collection process....................................................................................................10
3.3 Data analysis process......................................................................................................11
3.4 Ethical consideration........................................................................................................11
4. Presentation of findings.........................................................................................................12
4.1 Data analysis................................................................................................................... 12
4.1.1 SWOT analysis.........................................................................................................14
4.1.2 4P’s of marketing mix for Starbucks..........................................................................16
4.2 Reflection on findings.......................................................................................................18
5. Conclusions and Recommendations......................................................................................21
5.1 Recommendations...........................................................................................................21
References................................................................................................................................ 24

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1. Introduction
1.1 Background
Starbucks is said to be one of the most recognizable coffee brand in the food and
beverage industry across the world. With more than 28,000 retail stores in 76 countries
(Starbucks Coffee Company 2018), Starbucks has come a long way from opening a
single store in Seattle in 1971.The brand is reputed for its innovative strategies and
signature products. The marketing strategy of Starbucks is product and customer
oriented which help the company generate $2,238.7 million USD in the year of 2017
(Starbucks Coffee Company 2018). Around the world, the brand is reputed for its
innovative strategies and signature product.
1.2 Project topic
The title for the project would be “Marketing strategy development and
implementation for Starbucks” since marketing strategy holds immense importance
for business strategy development. Starbucks will be chosen for the research as
Starbucks is a giant coffee house with business network spread over the world and for
which many start-ups follow the business strategy of Starbucks. Starbucks has been
facing some issues with strategic management and marketing strategy development
owing to the global economic crises. The blue ocean strategy is case in point. Blue
ocean strategy refers to the application of the combination of differentiation and low cost
for opening up a new market space as well as new demand. This strategy helps the
business to create and capture an absolutely unexplored market, where there is no
competition. This concept of marketing is based on the view that the market boundaries
are not fixed and can be reconstructed through necessary actions and needs (Kim and
Mauborgne 2014). The report will focus on the global strategies of Starbucks. The
company has also faced problems with respect to competitive positioning in the market.
Moreover, the company is finding it difficult to lure in more customers, with customer
retention at an all time low (Business Insider 2018). Development and implementation
marketing strategies would improve the competitive positioning of the brand.

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1.3 Purpose of the research
The main purpose of this research is to study the process of marketing strategy
development and implementation for Starbucks. The specific areas of interest with
respect to this topic would be the marketing policies and strategies followed by the
concerned organization. The internal and external environment of the company will be
analyzed along with its competitive positioning. Accordingly, recommendations will be
made based on the research results.
1.4 Literature review
As part of the research, certain marketing theories and models have to be
analyzed and this would be included in the literature review section. An extensive
research will be done under the theme of the importance of marketing strategy
development and implementation for business. The next section of literature review will
be done on the theme of several models and theories of marketing strategy. Finally the
literature review will include the marketing strategies adopted by different leading
companies.
1.5 Research method
The research will be exploratory in nature. Hence, the research will conduct on a
problem that has never been studied in a clear way (Panneerselvam 2014). The method
used would be a case study methodology. A case study methodology is one that is
based on evidence based research of real life phenomenon in an actual organization
(Panneerselvam 2014). The approach to this project would be methodological and
research based. This project revolves around the marketing strategies and
implementationby Starbucks with respect to local and international markets.
1.6 Data collection and analysis
Data will be collected from only secondary data sources that are publically
available. The data will be analyzed by comparing company data with literature both
academic and industry related.

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2. Literature review
2.1 Background of marketing strategy and implementation
Marketing strategy may be defined as a long term, ongoing process that can help
an organization attain sustainable competitive advantage in the concerned market. The
fundamental goal of a marketing plan is to equip an organization with favorable
marketing position, which can help the company attain its long term and short term
goals. Wensley (2016) claims that the marketing strategy of a company forms the vital
link between an organization and its customers. On a basic level, the concept of
marketing strategy analyzes the current market position of a company, its future course
of action for the company and its long term goals. Every organization has a set of
marketing objectives, which in simple terms, would help the company sell its products
and services. The fulfillment of these marketing objectives would require a detailed
marketing strategy, which acts like a blueprint formulated after thorough research.
Ramaseshan, Ishak and Rabbanee (2013) argue that there are two essential
components of a marketing strategy – the target market and the marketing mix. Target
market refers to the target audience to whom the particular company might want to sell
its products and services to. For instance, the market a company caters to would be
divided into a number of segments based on customer preferences, demographics or
behavioral patterns. All of these segments would not be of use to the company. On the
other hand, certain segments of the market may prove to be more profitable for the
company. Accordingly, the marketing strategy will have to be devised, keeping the
target audience in mind. The second component that must be taken into account is the
marketing mix, which accounts for the 4 P’s in marketing – namely promotion, product,
pricing and distribution strategies.
The marketing strategy of a company can help in determining its competitive
positioning in the market. Kumar, Rahman and Kazmi (2013) claim that having a robust
marketing strategy can prove to be extremely beneficial for an organization. Amidst
dynamic industrial conditions, companies are facing severe competition in the market
today. Moreover, there are new entrants to the market who threaten to uproot existing

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players. As such, a well defined marketing strategy would help a company establish
itself in the market. It would also help a company develop a USP or unique selling
proposition, which differentiates it from other products in the same market. Such a USP
would highlight the unique benefits and features of the product which would have to be
offered to the company in a unique and creative manner, which immediately appeals to
the target market. Kumar (2015) states that brand recognition is another essential
aspect of marketing and marketing strategy. An effective marketing strategy would help
a company establish a favorable brand image in the market, which is immediately
recognizable to the customers. The attributes and the legacy of the brand would be a
part of the branding or brand image of the company. Although it can be argued that a
marketing strategy would help a brand attract its target market, it must also be argued
that a robust marketing strategy can help a company tap into a previously unexplored
market and thus gain more customers.
Baker (2016) states that the most important aspect of a marketing strategy is the
strategy formulation. The first step in marketing strategy formulation is value
proposition, which highlights and identifies the market value of the company. Once the
value proposition has been stated, the company is expected to carry out thorough
market research which would help it identify its target market. Saif (2015) claims that the
success or effectiveness of a marketing strategy would depend on three main aspects –
marketing strategy improvisation, creativity and performance. Performance refers to the
way the various team members involved in the process are able to devise effective and
creative strategies, which usually involves a degree of brainstorming. Creativity refers to
the way the marketing team of a company is able to make optimum use of available
resources and technologies, which are different from the tactics that have been used
before. Marketing creativity has been found to communicate new ideas, develop
hypothesis, recognize problems and make a meaningful difference. It must also be
realized that marketing strategy formulation is a dynamic process, not a stagnant one.
In other words, the marketing strategy of a company is evolving constantly. There are
new trends emerging in the market, with the level of competition increasing every day.
As such, the marketing strategy of a company will have to be modified and improvised
from time to time, to ensure optimized results.

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2.2 Importance of competitive advantage and positioning
The marketing strategy of any organization would contribute to its overall
competitive positioning. As Urbancova (2013) states, competitive positioning would
ensure that the organization in question stands head and shoulders above the rest of
the companies in the same industry. A company can hope to succeed in the market only
if it can establish itself as unique and different from the other companies in the same
field, or its rivals. This is also known as strategic competition, which entails devising
new ways and methods of wooing customers and luring them or coming up with
innovative new ways of meeting customer needs. The sustainability or profitability of a
company would depend not on how it is able to perform in the market but on how it
performs in the market with respect to its rivals. The global economy at present is in a
very volatile state, which has proved to be quite challenging for most firms. The
continuously changing global scenario makes it nearly impossible for companies to
sustain their competitive advantage on a long term basis. Zikmund et al. (2013) opined
that for a company to keep up with the pace of the changing marketing trends, the
marketing strategy of any organization would have to be reviewed and monitored at
regular intervals, their effectiveness would have to be assessed and new trends in
political, social, technological and economic realities will have to be considered. Marchi,
Maria and Micelli (2013) are of the opinion that the intensity of the competition that a
company experiences along with the speed at which the competition presents itself
plays a crucial role in determining the competitive advantage of a company.
One of the most important aspects of competitive advantage is sustainability.
According to Kumar and Pansari (2016), a marketing strategy can be called successful
only if it proves itself sustainable over a prolonged period of time. Various other
concepts in marketing like superior performance, strategy and planning, core
competencies, innovation and the integration and implementation of marketing strategy
would determine its competitive positioning. Most importantly, it can be said that the
sustainability of a marketing strategy would depend on how an organization is able to
surpass a company or organization in the same industry which has been around for a
prolonged period of time. Abdul Jalal, Toulson and Tweed (2013) have stated that there
are essentially a few types of competitive advantage that a company can have over

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another – access to highly skilled human capital and human resources, access to
resources which other rivals might not have knowledge of or access to, a unique and
distinct geographical location, access to knowledge proprietary technology, the ability to
come up with top quality products and manufacture products at lowest possible costs
and establishment of a superior brand image.
One of the most important factors while considering competitive advantage is
value mapping or value proposition. According to Bocken et al. (2013), it is the creation
of value which can help a company attain competitive positioning in the market. In
markets, which have a lot of rival companies competing for the top position within the
same industry, the trade margins are usually minimal and low price strategies would
thus be ineffective. Therefore, companies would have to come up with creative and
innovative ways of creating value. For instance, one way of adding value to an
organization is by adding innovations to its existing products. A traditional product which
has been exploited fully by all companies competing within the same industry could be
made unique and appealing by adding certain innovations or new features.
There are essentially three strategies which can help a company attain
sustainable competitive positioning, namely cost leadership strategy, differentiation
strategy and focus strategy. According to Littler (2015), cost leadership strategy is
adopted by a company which strives to be the lowest cost producing company in a
particular market. This can be achieved through large scale production of the same
product. This means that if a company is able to make optimized use of resources and
exploit the economies of scale, thus producing the products at a cost lower than that of
the competitors, it would increase the overall profitability of the company. This is
because the profit margin would increase. In other words, a company that follows the
cost leadership strategy would be able to gain significant cost advantages over its rival
companies. On the other hand, Banker, Mashruwala and Tripathy (2014) argue that a
differentiation marketing strategy would be more beneficial for a company as far as
competitive positioning is concerned. It refers to the approach that is undertaken by a
firm in order to develop and also market unique and innovative products, directed at
different and varied customer segments. Such marketing strategies usually consist of

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expensive advertising and promotion strategies. In other words, the main purpose of a
differentiation marketing strategy is to establish a particular brand as unique and distinct
from the others in the same field. For instance, innovation and invention in terms of
product, branding or marketing campaigns can be a part of differentiation strategies.
Leonidou et al. (2013) argue that the focus marketing strategy is equally effective when
it comes to attaining a competitive advantage. In this kind of strategy, the company
would be focusing its products and services towards a very specific and niche target
market. The strategy can be called successful when a company is able to cater to the
needs and demands of the customers. In this case, the company would be directing all
its resources and strategies towards a specific industry and market segment. In such a
strategy, the company is perfectly aware of its niche market and devises marketing
strategies accordingly.
2.3 Importance of marketing mix in the present context
Marketing mix refers to the four essential components of marketing strategy of an
organization – the product, the pricing, the promotion and the distribution strategy.
Huang and Sarigollu (2014) have stated that the main purpose of a marketing mix is to
create a marketing strategy that is supported by evidence and research and helps in the
formulation of a clean mix. In other words, it helps in the formulation of a strategy where
each of the P’s is compatible with each other. For instance, the product strategy should
be aligned to the pricing strategy and so on. Similarly, if a company is planning to
introduce a new product into the market, the marketing mix can help in the development
of a new product (Festa et al. 2016). There are usually a number of innovative ideas
surrounding a new product, all of which can be incorporated into the marketing mix.
Moreover, a marketing mix would add some depth to the product portfolio. For instance,
if some minor changes are required in a product, the marketing mix can help with that.
Essentially, marketing mix can be called a guide which can help in improving a business
(Singh 2012). Furthermore, using a well defined marketing mix would help a company
differentiate it from the rest of the companies in the same field. For instance, the rival
organizations might have poor distribution and promotion strategies, which can give
another organization an edge over them.

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3. Research methodology
3.1 Research method
This research study aimed to explore the marketing strategies and theories for
one of the major coffee and beverage companies in the world, Starbucks. This study
contains an organization case study under food and beverage industry. This
organization was chosen as it is a prominent global name in the coffee and beverage
industry and earns a large amount of revenue, which was beneficial for analysis. This
implies that the study has taken the case study research design and Starbucks is the
case study company. According to Lewis (2015), there are some benefits of choosing
case study research approach or design. This allows the researcher to narrow down the
horizon of the study and put more focus towards a single topic of interest, which is
beneficial for conducting an in-depth study on the research topic. The evaluation of the
data is done for the specific context (Hancock and Algozzine 2016). Another justification
of adopting case study approach is it makes the study outcome more practical and
relatable as the study is conducted in the real life scenario. This is also helpful in
understanding the real life or practical world complexities and challenges creating
obstacles in the path of the research topic (Brannen 2017). Hence, case study approach
allowed the researcher to study the marketing aspects of the Starbucks exclusively and
thus, the outcome is more specific and accurate.
3.2 Data collection process
The researcher collected secondary data to conduct the study on the marketing
strategies and its effectiveness on the business performance of Starbucks. Secondary
data refers to the data that is gathered from already published sources, like, books,
journals, magazines, news paper articles, government and official websites, annual
reports of the companies, government publications and reports etc. (Walliman 2017). In
this given study, the researcher explored the official website of Starbucks to gain access
their annual reports, and also explored the archives of the eminent news papers,
journals, online publications and reports on market analysis and previous survey reports
on Starbucks to examine the research topic. Since, Starbucks is the case study

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company, hence, the annual reports and other specific reports on Starbucks were
emphasized more.
Primary data was not considered for this study, as it is difficult to assess the
population for the study, who could give effective insights about the effectiveness of
current and potential marketing strategies of Starbucks.
3.3 Data analysis process
Qualitative analysis method was applied on the secondary data to evaluate the
research topic. Various facts and figures were collected from the official websites,
annual reports, market analysis reports, newspaper articles and journal articles on the
marketing strategy and products of Starbucks, and using descriptive study method, the
information were analyzed and interpreted. The findings were presented under different
themes in chapter 4.
3.4 Ethical consideration
This research study also has some ethical considerations. Accessing secondary
databases is not always easy, as most of those require permission to access the data.,
especially for the government statistics and reports. Hence, specific permissions were
needed and by stating the purpose of the study, the permissions for accessing the
databases were obtained. Secondly, since the study was conducted to create new
marketing strategies for increasing the profitability of the company, hence, the data and
the analytical reports were to be kept confidential throughout the study, as per the data
protection act. Moreover, there could be reliability issues due to authenticity of the data,
and degree of risk of inaccurate outcomes.

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4. Presentation of findings
This chapter presents the analytical findings of the data, gathered from various
secondary sources. The study involves qualitative analysis of the secondary data on the
marketing techniques and strengths and weaknesses of Starbucks. Analytical tools,
such as, SWOT analysis and 4P’s of marketing mix have been applied on the
information gathered to illustrate the current marketing strategies of Starbucks and to
recommend new strategies for implementing further improvements. These tools were
chosen as these would address two different but inter-connected factors of the
marketing strategies and internal environment of the company that influences its
business or market share.
4.1 Data analysis
Starbucks is one of the major coffee roasting, brewing and retail companies of
the world, with operations in more than 76 nations through more than 28000 stores
(Investor.starbucks.com 2018). It is successful in establishing itself as one of the most
identified and respected brands. The company needs o develop improved marketing
strategies as it is seen from its financial report that the growth percentage of
consolidated revenue is declining since 2015, it was 16.5% with 19.2 USD billion, 11.2%
growth rate with 21.3 USD billion in 2016 and 5% growth rate with 22.4 USD billion in
2017 (Jurevicius 2018). Thus, although the figures in consolidated revenue have been
increasing, the percentage of growth is declining. Hence, internal environment analysis
has been performed along with 4P’s of marketing to evaluate the current strategies and
develop the potential strategies.

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Figure 1: Starbucks’ consolidated revenue 2011-2017
(Source: Jurevicius 2018)
Figure 2: Starbucks' operating profit margin 2012-2017
(Source: Jurevicius 2018)

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Figure 3: Market share of leading players in the global coffee industry
(Source: Forbes.com 2016)
4.1.1 SWOT analysis
SWOT is an important analytical tool that is applied to study the internal and
external competitive environment of a company. SWOT stands for Strengths,
Weaknesses, Opportunities and Threats. This analytical tool helps an organization in
strategy making process by identifying the above mentioned factors of its internal and
external environment (Suh 2014). The findings on the internal and external environment
of Starbucks obtained through the analysis of the financial reports of Starbucks, various
news articles and market analysis reports are presented below.
 Strengths: Starbucks has a very strong brand image. It was established in
1971 in Seattle and since then it has been able to build a strong brand image by
delivering highest quality of coffee. The pool of loyal customers is growing

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considerably across the world. This adds security and stability to the business.
The company also has a strong and extensive global supply chain, such as,
suppliers of Arabica coffee beans. This helps it to maintain its product quality.
Moreover, the company has successfully adopted diversification strategy
through acquisition or development of subsidiaries, such as, Ethos Water,
Teavana and Seattle’s Best Coffee. This strategy has helped it to reduce the
market risks. The variety of products, that is, hot and cold beverages, has also
helped it attract more customers of all ages. It has also been found from the
financial performance that it has operational efficiency that has led to expansion
of its business.
 Weaknesses: Starbucks’s products are quite costly as compared to that of its
rivals. The high price helps it to increase its profit margin, but reduces the
affordability. This limits the scope of expansion of the company in regions with
lower disposable income. Moreover, although its price its high, Starbucks
maintains a generalized standard for the crafted beverages to retain its
existing customers, and this reduces the cultural alignment of these products with
the local target customers. In addition to that, many of the products are easily
imitable, which reduces its exclusiveness. Thus, the local coffee beverage
companies can imitate some of its products and also the ambience of the cafes,
which affects the profitability of Starbucks.
 Opportunities: Starbucks is already an established name in the global coffee
and beverage industry, and with the help of the strong brand image, it is now
expanding its businesses in the developing countries. Asian countries
provide scopes to open businesses for Starbucks. It can opt for further
innovations and diversification in its product lines. This would reduce its
dependency on its current business and increase long term stability. Lastly,
Starbucks can opt for alliances and partnerships to increase its market share.
Partnerships with large global and local retailers will enable Starbucks to
distribute its products in a larger area with more efficiency.
 Threats: Competition from the low cost coffee businesses in all the regional
markets is a major threat to the company. Not only individual coffee sellers, but

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the restaurants also provide high quality coffee at a price lower than Starbucks
and thus, it faces competition from these restaurants also. Imitation of products’
look, feel and taste, café designs and ambience is another threat to Starbucks.
Lastly, there are some independent coffee industry movements to push the
local coffee industry rather than promoting the multinational coffee chains.
4.1.2 4P’s of marketing mix for Starbucks
Marketing mix refers to the combination of the factors that are controlled by the
companies for influencing the purchasing behavior of the target consumers (Ang and
Rusli 2018). The marketing mix usually consists of 4P’s, namely, product, price, place
and promotion, which are main components of marketing. This is particularly important
for marketing of products. This marketing mix analysis for Starbucks is done for its
existing marketing strategies and to find out the scope for further improvements.
Figure 4: 4P's of marketing mix
(Source: Ang and Rusli 2018)

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 Products: Starbucks offers various types of coffee and beverages, including,
different types of coffee, tea, frappuccino beverages, pastries and cookies,
smoothies, cold beverages and different types of merchandised products, such
as, mugs, instant coffee packets, etc. Years of business innovations, and
acquisitions of smaller local companies has led it to introduce different types of
beverages, such as, it launched frappuccino products after it acquired The
Coffee Connection in 1994 (Nanos 2012).
 Place: Maximum number of these products is offered in the Starbucks cafes and
outlets. However, in the retail chain stores, Starbucks supplies the cold
beverage, that is, the cold coffee. Other than that, the packaged products and the
merchandised products are available in the online stores and apps and some of
its large stores. Based on the changing market needs, tastes and preferences
and technologies, the company has launched the merchandised products, whose
designs keep on changing.
 Price: Starbucks follows premium pricing strategy. It addresses the behavioral
aspect of the consumers where the perception of high price-high quality aspect of
the products is more preferred. The products of Starbucks are high priced
compared to that of the other competitors, and through this strategy, the
company maintains its image of providing high-end specialty products.
 Promotion: Starbucks spends quite a large amount of money for promotional
activities, especially for advertisements. Various types of advertisements, public
relations events and sales promotional activities are undertaken by Starbucks
every year. Through digital and print media, social media, radio and fliers, the
company reaches out to the target customers. It has also introduced gift card
systems. Another promotional technique used by Starbucks is writing the name
of the customers on the cups and make it personalized. This attracts a large
number of young customers, who like keep the cups with their name on it as
souvenirs. As per the financial report 2017 of Starbucks, it is found that in 2017,
the company spent $282.6 million. In 2015, the promotional activities cost $227.9
million and in 2016, the amount was $248.6 million (Starbucks 2017). Thus, the
promotion cost is increasing over the years.

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From the above analysis, it can be concluded that there are some issues in the
marketing and business operations of Starbucks. For example, the threats of imitation of
products, competition from low priced local sellers, generalized products, higher price
etc. are affecting the business operations and profitability of Starbucks. On the other
hand, the strong brand image and large number of loyal customers, innovations,
extensive global supply and distribution network are the strengths of the company.
Using these strengths, the company has applied premium pricing strategy to attract the
target customers. However, this is also one of the weaknesses of the company. Thus, it
can be said that Starbucks, being one of the premium coffee selling companies in the
world, offers high-end coffee and beverage products, however it also faces some
challenges in the market due to its high-end image and high price and scope of imitation
of the products. The revenue of the company is growing and number of stores is
increasing across the world, however, the rate of growth has declined over the past 2
years. Qualitative analysis was applied to interpret the data gathered from different
sources and present the findings. SWOT analysis was beneficial to understand the
company’s internal strengths and weaknesses and external threats and opportunities,
based on which, the company makes strategic decisions about marketing. The
marketing mix analysis presented that the company offers variety of coffee and
beverage products and merchandised products at a higher price to create an image of
exclusivity and high price-high quality perception among the customers. Thus, on one
hand, the price is giving the company a premium image; while on the other hand, the
price is creating scopes for the local and smaller competitors to give competition to the
company.
4.2 Reflection on findings
Starbucks has a very definite and well defined marketing strategy which is
product oriented. The brand has successfully differentiated itself from other companies
in the same business by using its innovative product strategies as its USP. The
premium quality of coffee and beverages offered by Starbucks, along with the
innovations that these beverages come along with, makes the brand the world’s top
favorite. The quality based product differentiation strategy that is followed by Starbucks
around the world has resulted in its popularity and customer loyalty (Nasution et al.

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2014). Yet, the company’s marketing strategy does not just revolve around its products
and prices. Instead, the company has relied heavily on its promotion and marketing
strategies, which have helped to a great extent with its reputation management.
Starbucks has also garnered quite a reputation for its unparalleled customer service. In
fact, this is one of the most important factors that have contributed to its positive
reputation and word of mouth advertising. The company has successfully positioned
itself as a premium brand in the global coffee industry, which provides its customers
with a unique and premium coffee experience (Harrington, Ottenbacher and Fauser
2017). The value proposition of the brand around the world is based on the quality of
products provided, the excellent customer service and a youthful, vibrant store
experience and environment, which greatly appeals to the younger audience.
Brand merchandise is an important aspect of the differentiation market strategy
that is followed by the company, which has led to increased levels of customer
satisfaction and retention as well. For instance, the Starbucks logo is one such
example, which has helped in establishing a premium brand image. Moreover,
Starbucks has always relied on unconventional and innovative strategies for marketing
its products (Martínez-Torres, Rodriguez-Piñero and Toral 2015). It has rarely ever used
the traditional means of advertising and promotion for its products; instead, it mainly
relies on social media to reach out to its niche market (Taecharungroj 2017). Similarly,
the company also has a loyalty program which helps with customer retention. Around
the world and in almost all its outlets, Starbucks offers a free item to its customers after
every twelve transactions. Such promotional strategies have always worked in favor of
the company.
However, around the world, Starbucks is no longer the only premium coffee
brand. For instance, in the UK, the native brand, Costa Coffee has established itself as
a forerunner in its native market. Moreover, Starbucks also faces threats from a number
of new entrants like Nespresso, who provide similar unique products (Brem, Maier and
Wimschneider 2016). One of the main reasons why Starbucks has lost out on its
competitive advantage in the recent years is because of its pricing strategy. The
products by Starbucks are mainly of a premium range, and therefore have a high pricing

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strategy. In fact, the products of Starbucks are mainly directed to a specific section of
the market – high income individuals (Haskova 2015). As such, the younger generation
who might not have as much money might find it difficult to afford Starbucks. On the
other hand, Starbucks products have lost their variety. Customers require something
unique and innovative, which would affect their intention to return. However, Starbucks
has mainly been relying on its traditional flavors and products, which has led to a dent in
its overall profitability.

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5. Conclusions and Recommendations
This section presents concluding remarks on the study and recommendations for
the managers of Starbucks and the coffee and beverage industry. It also presents a
summary of the entire paper. The purpose of the project was to evaluate the marketing
strategy development and implementation for Starbucks, by examining its internal and
external environment. Qualitative analytical tools have been applied for the study.
SWOT analysis was performed for environment analysis and 4P’s of marketing mix was
applied to illustrate the current marketing strategy of the company and its implications.
Secondary data was studied for this purpose.
It was found from the study that the company mainly focuses on applying
premium pricing to attract the customers, who have the perception of getting higher
value or quality from the products by paying higher price. Innovation, diversification,
strong brand image, strong global supply and distribution network, are the strengths of
Starbucks, while imitable products, higher price etc. are the weaknesses. The marketing
mix is based on these aspects and it is successful in retaining its market position in the
coffee and beverage industry.
5.1 Recommendations
Starbucks is a leading coffee and beverage company despite its higher priced
products. Best quality coffee products sourced from the original places has helped it to
gain popularity among the customers. However, there are some issues or challenges
faced by the company which can be addressed in the following way.
 Starbucks should opt for further innovation in the product lines and launch some
lower priced coffee variety. This would increase the affordability of Starbucks,
especially in the developing countries, where the average level of disposable
income per capita is lower than that in the developed country. This would also
help Starbucks to increase its market share in the developing countries.
Following the argument by Ramaseshan, Ishak and Rabbanee (2013), target
market is an essential component of marketing strategy and Starbucks should

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consider the lower income groups as also their target market. That would help it
increase its market share.
 It should also make the products so innovative that the competitors cannot
imitate the products. As stated by Urbancova (2013), keeping the innovation
factor constant in the business strategy helps a company to remain competitive
in the industry. Starbucks must try to make its products unique and innovative so
that it can maintain its competitiveness in the market. The changes should be
frequent and unpredictable regarding the timing of the launch, so that people
anticipate about it and stay hooked. This can also be a promotional technique as
it would increase the attraction of the customers.
 Starbucks should reduce the generalization of the coffee products and launch
products suitable to different countries, aligned with the cultures and
demographic aspects of the nations. This will push Starbucks to introduce some
different coffee and beverage products in different countries. This will also
enable the loyal customers of Starbucks to enjoy different type of coffee and
beverage products in different countries where they travel for business or
vacations. Hence, this will increase the number of loyal members of Starbucks.
People will stay loyal to Starbucks to taste the new or different products that are
country specific. As highlighted by Bocken et al. (2013), value creation is
important for achieving a sustainable position in the market, and through product
differentiation, Starbucks can offer more values to its loyal customers and
intrigue their interests in the new and existing coffee and beverage products.
 Starbucks should increase its partnerships with more retailers to reach a larger
market. Locally and globally it should increase its distribution network. The cold
beverages should also be kept at all type of retail stores and convenience
stores, irrespective of their sizes. This will help Starbucks to increase its market
share. This is a strategy for sustainable marketing also, as advocated by Kumar
and Pansari (2016).

23FINAL PROJECT REPORT
 Number of merchandized products should be increased, such as, Starbucks
should also print customized t-shirts, caps, pens etc. apart from only the coffee
mugs. This will help the consumers to spend money on those, and increase the
brand awareness as well as brand recognition, as advocated by Kumar (2015).
 Lastly, Starbucks should include the local suppliers in their supply chain network
as that would bring economic benefits to the local suppliers and also increases
sustainability. This would also address the diversity in coffee cultures and
reduces the dependency on few suppliers and thereby uncertainty in supply
activities. This strategy can also be attributed to the sustainability of the
business of Starbucks.
Thus, it can be said that although Starbucks is a leading global brand in the coffee
and beverage industry, it requires some strategic decisions regarding innovations,
product diversification, and alignment with cultural diversity and difference in coffee
consumption habits, and most importantly launching lower priced coffee and beverage
products. This will help Starbucks to increase its market share and profitability in future.

24FINAL PROJECT REPORT
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