Strategic Marketing Assignment - Starbucks

STRATEGIC MARKETING

EXECUTIVE SUMMARY
Report highlights the launch of new product by Starbucks that is coffee flavour of fresh
vanilla with caramel in Nigeria country. Starbucks is a well- known brand of coffee shop that
supplies different variety of coffee beverages to their customers. It is located in approx 30000
areas worldwide. The report will throw light on PESTLE analysis that is conducted to examine
the available opportunities and threats that Starbucks will going to face in Nigeria. Introduction
of new coffee flavour will assist in generation of various negative impacts which have to be
handled by Starbucks in effective manner and this can be removed by conducting PESTLE
analysis. Apart from that, Starbucks should adopt porter generic strategy to gaining competitive
advantages properly. In this procedure, different dimension helps to analyse strength, potentials
and different core competence of business organisation. After implementing this strategy,
Starbucks can easily distinguish organisation's targeting segmentation and its competitive scope
to make positive modification and alteration in their business strategies.

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION ..........................................................................................................................4
TASK 1 ...........................................................................................................................................5
PESTLE analysis of Nigeria to launch new flavour of coffee including opportunities and
threats .........................................................................................................................................5
TASK 2............................................................................................................................................6
Assess three modes of market-entry...........................................................................................6
TASK 3............................................................................................................................................6
Market segmentation and targeting.............................................................................................6
TASK 4............................................................................................................................................6
Porter's generic strategy..............................................................................................................6
CONCLUSION ...............................................................................................................................6
REFERENCES ...............................................................................................................................6

INTRODUCTION
Strategic marketing is an effective process that involve coming up with new and
innovative idea in order to satisfy customer's needs and wants. Organisation apply this concept to
examine the current market situation that is prevailing and make decision accordingly so that it
results in increase in growth and productivity at significant level. It also involves coming up with
new product that is launched by studying the preference or behaviour of consumers and result in
gratifying their desires (Preston, 2012). The report is about new product that has been introduced
by Starbucks which is new flavour of coffee (fresh vanilla with caramel) in Nigeria country.
Starbucks is well known brand name in coffee house chain and was established in Seattle,
Washington. It is different from other competitors due to its quality, taste as well as consumer's
preference which make them unique and famous. This assignment will highlight the discussion
about PESTLE analysis that will assist in examining various threats and opportunities that will
be faced by company in new country. Apart from it, evaluation of market segmentation and
targeting is performed to study potentials of target market.
TASK 1
PESTLE analysis of Nigeria to launch new flavour of coffee including opportunities and threats
Business organisation produce some products or services in order to meet needs and
wants so customers at market place (Dibb, 2012). Hence, they have to introduce some new and
developed product to assist their existing growth and development. Keeping this in view,
Starbucks should introduce new coffee flavour in Nigeria and the main reason behind it is to test
the customer's response to new flavour as well as to expand their current growth. Officially the
federal republic of Nigeria, is the constitutional republic comprising 36 states and its capital
territory, Abuja. The country is located in west Africa and shares border with Republic of Benin
in west, Chad and Cameroon in the east and Niger in the north (Fagbote and Olanipekun, 2010).
Nigeria is often referred to as the giant of Africa due to large population and economy. In
this context, pestle of a particular environment is adequately analysing, it provides the concise
information of the market in which a company intends to operate thereby enabling it to make
forecasts about future changes. PESTLE analysis helps to know the business environment of the
country while launching a new product. It is describing in detail with relation to emerging

markets (Davari and Strutton, 2014). It has been observed that this country is among the
emerging country that is beneficial for the organisation to start their production process in such
places in relation to their growth.
 Political factor: These factor is related to the governmental policy and practices that can
affect business operations and functional activities. For this, Starbucks have to make
proper decision to follow all the regulations by analysing its impacts on their business
practices. In Nigeria, these political fluctuations can create risks, uncertainties for
introducing a new product in a country. So for this, Starbucks have to implement all these
governmental policies and rules that are formulated by authorised body of Nigeria.
Through this, firm can easily face major challenges to deals with local and multinational
political outcomes (Wrenn and Mansfield, 2014).
 Economy factor: In reference to this context, economic factor is an essential part of it.
This factor includes the economy factor of the Nigeria such as growth of an economy, per
capita income, gross domestic product and population compensation. There are several
other factors to be considered such as consumer purchasing power , utility of the product
etc. Economic growth is associated with progress that helps to maximise an
organisational structure in effective manner. For this, Starbucks needs to render several
impactful services in Nigeria as employment, standard of living and progressive national
income to getting beneficial outcomes.
 Social factor: The modern industry of coffee has room to make major changes for
appropriate growth. For Starbucks, it is required to analyse impact of social factors of
Nigeria on their business procedure. Through this, they can easily make positive changes
on the bases of customer's requirement and demand. Major expected changes in that can
happen in future will be cost, demand and trends. So for this, Starbucks needs to make
impactful strategy to adopt such changes easily in their business structure. Through this,
they can easily expand their business structure in several economies as in Nigeria. Major
advantages of this process can be optimistic forecaster for significant growth (Cavusgil
and Guercini, 2014).
 Technological factor: Technological factors has vast impact on a business organisation
and its practices. For Starbucks, it can be a beneficial move to adopt advancement in their
business procedure. Through this, they can easily expand their organisational structure in

Nigeria by implementing positive changes in their products and services. Currently,
Starbucks adopt advance technology in their production services but for them, it is
requiring to make positive changes on the bases of future trends (Meissner, 2012). For
this, they need to introduce mobile application services for customers of several
countries. These are the measurable opportunities that can maximise supply chain
strategy of firm in Nigeria.
 Legal factor: It play a prominent role in determining the worth of venture or not. The
legal setup which belong to the judicial arm of Nigeria government. This factors includes
the health and safety act as for Starbucks, it is required to serve hygienic products and
services to their customers to ensure optimum safety of the health of consumers and
employees. This factor is more imperative for the Starbucks company that entering to
foreign country.
 Environmental factor: This factor includes the components of environment element
such as the pollution, industrial waste, oil spillage, solid waste, drainage blockage and
other form of hazard of Nigeria. Environment analysis is important to develop the
sustainable business modal and seeking out collaboration. And, help in to minimize
utilization of resources (Harding, 2017). Government of Nigeria regulate some strict rules
for environmental safety procedure (Harding, 2017). So for this, Starbucks needs to
implement eco-friendly services and products. They make sure that Starbucks carry out
their production process that do not result in harming of environment where it is
operating. Management of Starbucks must make sure that company do not contribute in
drainage blockage, generation of air pollution which will pose a huge threat in front of
company. This aspect will help the Nigerian government to start the production and lead
to accomplishing of final vision and mission.
Recommendation – Starbucks needs to make positive changes in their business procedure and
practices to remove majors threats easily As Starbucks focuses with innovation concept and
always wants to make their efficacious image in customer's mind for longer period of time
(Simkin and Dibb, 2013). Apart from it they can use promotional strategies to promote new
flavour of coffee in order to earn high market share in Nigeria. The other benefit which is
included here it is that there are not much branches of Starbucks in African country hence, it is

beneficial for them to gain this advantage. For eco-friendly services, they needs to use glass
mugs or paper straws rather than plastic fibre.
TASK 2
Assess three modes of market-entry
There are different modes of entry and before selecting a best option it is important that all
the possible alternatives are evaluated well in advance so that the desire results are achieved.
After analysing all aspects to entry option final decision can be adopted which will yield them
high profit and outcomes (Gerritsen and van Olderen, 2014). Some modes of market entry
options that can be adopted by Starbucks in order to launch new coffee in Nigeria is described
below:
 FDI (Foreign Direct investment): According to Zhang, Y. and et.al., (2010) this is a
suitable option for starting a new business in another country. In this type of market
entry, a particular country allows investors to invest in that company so that
improvements in economic condition can be done. Starbucks can adopt this type ODF
option in order to launch their new product in Nigeria. Moreover, this options assists in
gaining high market share in that particular country. The author further adds that with this
option Starbucks would be saved with taxes. Parent enterprises would also provide
foreign direct investment to get additional expertise, technology and products. The
productivity of business increases with the rise in foreign investment. Thereafter
O'Malley, Story and O'Sullivan, (2011) says that this option has some negative factors
too. In case of change in the political factors it becomes difficult to manage operations in
the new country.
 Joint ventures: As per the view of Killing, (2013) this is a major way through which
market entry can be made by Starbucks. This is done through the various reasons of
political conditions that are prevailing in that particular locations. In the process of joint
venture two existing companies join hands together and combine all their resources.
Expenses and incomes are shared in the agreed ratio which helps in the expansion of
existing scale. It has an advantage of increasing the present scale of operations as
available resources increases for the enterprise. apart from this risk is shared among the

partners which reduces the degree of loss. It also has few negative points like there are
greater chances of miscommunication which can lead to vague objectives. Apart from
this when a joint venture is established between two different countries it leads to
differences in culture.
 Licensing: Gudlavenkatasiva and et.al., (2014) says that licensing can also be an
effective method of expansion for Starbucks. In this, organisation have to reserve their
rights in order to produce their product to another location. Licence of the intangible asset
has to be taken before commencing with the business activities. Licensing a company's
production processes can provide revenue and name recognition benefits. However, it can
also create foreseen and unforeseen disadvantages. A license gives authority to another
person to have an assess to the confidential information which may in some case can be a
great risk for the parent company.
From the above discussion, it has been concluded that there are various ways
through which Starbucks can enter into Nigeria. It is suggested that it should go for
franchising. This is the most suitable mode of entry as it has various favourable options to
offer Starbucks. This may help the referred enterprise in saving much cost of
implementation and also burden of managing a new store can also be minimised. There is
a limited risk in this business option as a fixed amount is received against giving the
franchise no matter wheatear the other person is benefited from same or not. Contradict
to this in case of joint venture there is high degree of risk involvement as it is can be a
temporary mode of entering into new market (Alon, 2014). In case of unequal efforts by
the different parties involved can lead to conflicts in future and hence they may have to
shut down or discontinue the business option. Thereafter licencing is also less suitable as
not every country welcomes this option and also high risk is involved in case if the other
party miss uses the provided data of Starbucks.
Legal frame require is the process of formation of number of documents that need to be
formed with the presence of both the parties selling and buying franchise. On the other hand,
legal phases that involve taxation, technical aspects must also be included in it which have to be
in priority. At last, proper signing must be conducted so that no issues get raised in future time
period (Tomczak, Reinecke and Kuss, 2018).

TASK 3
Market segmentation and targeting
Market segmentation and targeting refers to classifying the overall market area into
segment so that it can be focused upon properly. In the process of market segmentation, the
whole market is divided into different groups sharing mutual demands or having other common
traits. It helps in delivering effective services which has the capacity of improving total customer
satisfaction level. On the other hand, targeting is an entirely different concept in which proper
market research is done in order to identify the potential customer of the company. There are
range of users of Starbucks and by targeting the suitable group maximisation of sales can be
done. There are several factors that need to be consider by business organisation like, customer'
nature, preferences, tastes, income so that proper decision can be taken place effectively.
Starbucks utilise segmentation and targeting strategies in order to examine their target customer
from all people in market place. Basically, in this plan is drafted to find out whom the product
has to be sold (Lee and Carter, 2011). The market segmentation that can be adopted by Starbucks
is described below:
 Geographic Segmentation: As the name suggests the market is segmented on the basis
of geographical locations. Hence, all decision and plans are formulated to that particular,
location (Gotsi, Lopez and Andriopoulos, 2011). There are number of factors that need to
be consider which include. Individuals that are living there, the market conditions that are
prevailing in that geographic location.
 Psycho-Graphic Segmentation: This type of segmentation is done on the basis of
lifestyle, social of that particular location where the product need to b introduced.
Starbucks have decided to concentrate on middle and high office income gainers that
have need to buy some good quality products. Their basic objective of Starbucks to
produce new flavour of coffee for educated people of Nigeria who can afford it easily.
 Demographic segmentation: This type of segmentation is performed on the basis of age,
gender, occupation that is available in that market portion so that company could decide
while considering all these sections properly (Rundh, 2011). Starbucks focuses on both
males and females or people between 22 to 60 year of age. By introducing their new
flavour of coffee they focus on public having occupation of professional, employees or
workers as well as students.

 Behavioural Segmentation: In this type of segmentation factors that are consider
include personality, people status, loyalty in individuals. Hence, considering all these
factors Starbucks scan able to segment their market area. As Nigeria consist of different
nature of populations having diverse needs, attitudes, beliefs. Coffee is taken by coffee
lovers which consist of regular users who take this brand regularly.
Right Target market which can be opted by Starbucks
It is very much essential to decide the target market where Starbucks can launch their
new product, and the suggested market is of Nigeria where Starbucks have not been launched
yet. It can go for segmentation process to continue business in Nigeria that involve classifying
their potential customer on the basis of income, age, gender as well as market size. Introduction
of new flavours of coffee for the general public can be done, in which market is categorised into
distinct groups. It involves people that belongs to higher class of family or rich people (Hunt,
2015). Apart from this, proper attention is required as it helps in making decision regarding store
outlet where it will be situated. Nigerian people are fond of trying several new variety of
beverages that allow them to try new flavours of coffee, which is a beneficial factor for
Starbucks. On the other hand, Starbucks can also work on maintaining the prices of its products
as it will help in creating demand of fresh vanilla with caramel coffee flavour in the new market.
From the above discussion, it has been concluded that in order to launch the product in new
country the strategy that can be adopted by Starbucks could be based on demographics and
geographic factors. This will help referred enterprise in achieving the set targets and objectives.
TASK 4
Porter's generic strategy
Every business organisation applies porter's generic strategies in order to study their
position in relation to market selection. Basically there are four elements that are focused upon in
this strategy that include differentiation, cost leadership, focus and differential focus (Sunkada,
Verizon Patent and Licensing Inc, 2011). As Starbucks is going to introduce to their new product
in Nigeria, it is beneficial to adopt these factors in order to gain high competitive image in
market area of this country, which are as follows:
 Differential strategy: It involve coming up with distinctive and differentiated product
that has not been introduced by any other organisation. As Starbucks have come up with

new flavour (fresh vanilla with caramel) which has not been introduced by other
competitors like Costa it can use this strategy to plan its future activities. By opting this
strategy Starbucks can also establish a different image in the coffee industry which will
assist it in achieving the competitive advantage. Overall costing helps in eliminating the
waste cost from the organisation which is adding expense to the enterprise total cost. This
cost is further added to the total price and makes it expensive (Zhang and et.al., 2015). It
further helps in giving a tough competition to other units dealing in the same field and
bring higher than average profits despite the presence of strong competitive forces,
 Cost Leadership Strategy: This is an effective way of developing the total sales for a
particular business. Under this the production team has to be very efficient so that the
final (Liebl, 2015). This can be accomplished through adopting all resources in such a
way so that no wastage could be attained and work is performed with efficient way. Apart
from it, Starbucks can reduce their manufacturing cost and ingredients that is used in
producing coffee (Hill, Jones and Schilling, 2014).
 Focus Strategy: Company adopts this type of strategy in order to put focus on particular
niche market place so that proper concentration is provided on them by making all
decisions regarding to that particular market (Reinecke, Manning and Von Hagen, 2011).
Starbucks can able to focus upon important elements and factors that will assist in
increasing the profitability and productivity of this company.
The selected general strategy by Starbucks:
The Starbucks Needs to adopt different strategy in their business procedure while
expanding their structure in Nigeria. Firm always implement price premium procedure in their
products and services. So for this, they need to adopt differential strategy to distribute unique
services in new market. Through this, they can easily gain higher competitive advantages.
Differential strategy involves unique features and creative ideas that helps to capture customer's
attention easily toward their products and services. All these business ideas and procedure would
be beneficial for Starbucks while they expanding in Nigeria. Through this, they can easily
promote their products and services in target market. It also helps to create a positive market
image in competitive market (O'Malley, Story and O'Sullivan, 2011). It will result in increasing
up of their sales as well as growth as Nigerian people will prefer their product over other coffee
shops that are already present there.

CONCLUSION
From the above prepared report, it has been concluded that strategic marketing plays an
essential role in business organisation when they have to introduce new product at some other
country or place. The report highlights the case of Starbucks in which they have decided to
launch a new flavour of coffee that is fresh vanilla with caramel in Nigeria country. Hence, in
order to carry out this process the company have to perform PESTLE analysis in order to
determine all threats and opportunities that are present in that market place so that effective
decision could be made in this regard. Part from it, Starbucks have to choose adequate market
option and they opted for joint venture which will provide them various benefits and advantages.
Porter's generic model is also applied to determine the best strategy that will be beneficial in
order to introduce new product.

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