Marketing Strategies for New Product Launch

This assignment delves into the crucial role of marketing in business success, particularly highlighting Starbucks' approach to launching a new product. It compares Starbucks' marketing strategies with those of Hilton, emphasizing customer targeting and market research. The report details a proposed marketing mix for the new Starbucks product, considering factors like price skimming, online sales, and promotional discounts. It concludes by stressing the importance of thorough market analysis and adapting marketing techniques to effectively reach diverse consumer groups.

Criteria
reference To achieve the criteria the evidence must show that
the learner is able to: Task no. Evidence
P1, P2, M1,
D1
P1 describe how marketing techniques are used to market products in two
organisations
P2 describe the limitations and constraints of marketing
M1 compare marketing techniques used in marketing products in two
organisations
D1 evaluate the effectiveness of the use of techniques in marketing
products in one organisation
1
P3, P4, M2,
D2
P3 describe how a selected organisation uses marketing research to
contribute to the development of its marketing plans
P4 use marketing research for marketing planning
M2 explain the limitations of marketing research used to contribute to the
development of a selected organisation’s marketing plans
D2 make justified recommendations for improving the validity of the
marketing research used to contribute to the development of a selected
organisation’s marketing plans.
2
P5 P5 explain how and why groups of customers are targeted for selected
products 3
P6, M3
P6 develop a coherent marketing mix for a new product or service.
M3 develop a coherent marketing mix that is targeted at a defined group
of potential customers. 4

P=Pass
M= Merit
D= Distinction

INTRODUCTION
Marketing is an activity which involves functions to sell goods and services. It is about
creating customer value and communicating with them in a best possible way to stimulate
purchasing. It includes study of market to understand behaviour and choices of customers. On
the basis of this study and research, potential customers are targeted to satisfy their needs
(Palmer, 2012). Here, two organisations are taken to understand and compare various aspects of
marketing in both firms. One is 'Starbucks' which is an international chain of coffee house
serving worldwide and sells ice-creams also at many groceries shop. Another is Hilton which is
the largest hotel chain serving across the world. The brand has started its different services which
is giving tough competition to other companies. The present report emphasizes on both
organisation's different marketing strategies.
TASK 1
P1, M1 Marketing technique used in both organisation
Marketing technique involves studying market and further processing through
segmentation, positioning and targeting (Malhotra, 2012). The three aspects of Starbucks are
discussed as under: Market Segmentation- The segmentation of market includes activities performed which
classifies the market into different groups based on customer's choices, demands,
behaviours and desires. Initially, Starbucks was more focussed on social class people,
like office going and normal routine working class people. The aim behind it was to give
some refreshment and break from tiring day in office. Now after getting success, it has
segmented the market geographically and demographically as well. Target market- Target market consists of division of market according to a common set
of buyers who have common needs and preferences. A company should always target
that segment where it can generate more profits with greater customer value and
satisfaction (Molesworth, Scullion and Nixon, 2010). Coffee served by the mentioned
company is expensive and hence it targets mostly middle to high income group of
customers. Company uses undifferentiated strategy concentrating on whole market as a
single segment.

 Market positioning- The main object of market positioning is to place the product's
image as a unique brand in the customer's mind. The cited firm also positioned its
product as a distinct one with high reputation against the competitors. The positioning
was mainly based on customer base where attention was paid to each and every aspect
that can satisfy the targeted customers. For this, organisation use to maintain good
infrastructures and music in the cafe to make the atmosphere more refreshing (McKenzie-
Mohr, 2013).
Techniques used by Hilton are described as below: Market Segmentation- Hilton uses different types of segmentations to attract a large part
of the customer base. It divides the market according to geographically, demographically,
behaviourally and psycho-graphically. Thus, it has a wider market to serve more number
of customers than Starbucks. This number has increased as Hilton is known for its
amazing hospitality services. It has reached to several countries and is still in the process
of reaching emerging markets. Target market- The target market of Hilton is high and medium income group people
(Armstrong and et.al, 2012). The cited firm has targeted every consumer who want to
afford luxury and those who usually travel from one destination to another. Moreover, it
is aiming to bring more innovation in its services in order to increase the number of
customers across the world.
 Market positioning - Mentioned Company started competition with other firms and from
that time it is continuously trying to position its place in customer's mind. It provides
high quality infrastructures with Wi-Fi facilities and other arrangements in the hotels.
Further, it is aiming to bring more flexible services (Sheth and Sisodia, 2015).
P2 Limitations and constraints of marketing
Some of the limitations in marketing which can generally limit the scope of marketing for
organisations are as follows: Sales of Goods act, 1979: This act was made with the provision of providing safety to
consumers while purchasing. Because of this act, the customers can have faith while
buying a product from new or established brand. Customers can easily trust the product
as they have the right which protects them against the bad quality of commodity. This
will help the newly entered products in the market as well.

 Consumer protection from unfair trade regulations, 2008: This act was made in UK to
protect the rights of consumers against any unfair trade practice (Papasolomou and
Melanthiou, 2012). The law states that no firm can use any means which misleads the
consumer to make buying decision of a product. The commodities should be of such
quality which a trader and manufacturer are expected. The marketing of such product
should not be done with false advertisement making false promises to increase sales of
the product. Consumer credits act, 1974 and 2006: This act provides cover t the consumers who have
entered in the credit purchase of goods (Skålén and Hackley, 2011). According to this
act, the consumer have rights protected in case the seller pressurises the buyer to make
payment earlier than agreed time. Besides this, seller cannot take away goods from
consumer on non-payment without serving a legal notice. The act of 2006, was made to
bring some reforms in the previous act of 1974 which create more fair means of credit. Data protection act, 1998: Every organisation use to maintain a database of its
consumers to create a customer relationship and using this information to retain
customers. The law provides protection to the customers so that no company can use the
personal information of consumers in a wrong way (Barile and et.al, 2012). Moreover,
the law has provided a guideline according to which the organisations are abide to follow
these rules in using information of clients.
 Consumerism and pressure groups: Consumerism and pressure groups are somewhat
same in terms of their scope and objectives. Both are formed by an individual or a group
who provide the customers protection against the unfair trade practices. This creates an
awareness among public so that no trader or organisation can use unfair means of selling
the product and damage consumer's health.
D1 Effectiveness of marketing techniques in Starbucks
Starbucks has created a valuable brand image in market and customer's mind as well
(Jones and et.al, 2011). It believes in serving users with high quality products which has helped
the organisation in creating brand loyal customers. This experience of customers with mentioned
organisation is very nice because of which they are ready to pay premium prices of product.
Besides this, cited firm provides a friendly and comfortable environment which gives customers
a feeling of relaxed and refreshed. Firm maintains a high quality and luxurious infrastructure

with most comfortable arrangements like good music in background, good messages on coffee
mugs, and visual arts in coffee cups. Moreover, it maintains good customer relationship
management to keep customer's feedback in their database and use it for marketing strategies.
The Starbucks mostly uses oral marketing which means marketing through words of customers
based on their experiences in the cited organisation (Louviere and et.al, 2013). This thing
differentiate the company from other competitors as it is the best way of marketing. Although,
the responsibility of aforesaid firm increases in such case as any one negative experience of
customer with company will impact the goodwill and reputation of business. Furthermore,
company use to maintain its bonding with customers by connecting with their regional cultures.
For this reason, it is also famous as a cultural brand among customers. All these marketing
techniques have made the aforesaid organisation successful in market against its competitors.
TASK 2
P3, P4 Marketing research for developing marketing plans
In the past years, Starbucks has done various marketing researches to make its marketing
plans successful (Dief and Font, 2010). Few years ago, mentioned firm came with a website
named 'My Starbucks idea'. This website enabled their customer to log in and share their
experiences in Starbucks and welcomed the suggestions to improve the services as well. The
website has features where every customer signing up can see various posts updated by
consumers and can also like and dislike them. The website used to ask questions periodically
about the company's performance, company's best menu and many more. Customers can give
votes and answers on these questions (Santucci, McHugh and Barlow, 2012). Further, company
had access of all customers who have made account on this website which made easier for the
cited firm to keep information of its customers. Mentioned industry got feedback from customers
easily which helped them to understand market trends and choices of consumers.
 Primary research- The primary research includes research done directly by conducting
surveys, questionnaires and interviews. So in case of mentioned organisations primary
research is conducted by taking feedback from customers on product, and asking for
suggestions as well if they want some changes in taste, or service of company (Clayson
and Haley, 2013).

 Secondary research: The secondary research is conducted by doing studies on already
available research papers and analysing pre conducted interviews and suggestions. The
mentioned companies use to allow a portal on the website where customers post their
views, feedback and suggestions which are read out by the organisation and next plans
are worked out.
The organisation use to follow both primary and secondary research according to the availability
of the consumer. As those population who are not much educated or do not have access of
internet, they can't give share their views on internet, hence their feedback can only be taken
directly by the sales executives on stores.
M2 Limitations of marketing research
The marketing researches done by Starbucks were successful, yet it had some limitations
as well. First of all, as mentioned earlier, company used to rely on advertisement done through
mouth which limits scope of marketing and getting feedback from more customers. Before
having feedback, it is necessary to make the products available in reach of customers. Further,
the marketing research tool of 'My Starbucks idea' website used by cited venture was not
accessible by large number of customers. The website do not use to update, as suggestions and
any other posts updated by customers long ago are still there (MyStarbucksIdea: Then and now –
Has anything changed? 2011). No new comments and suggestions are updated rather the old
posts are repeated on the website.
Besides this, the soil which is used for cultivation of coffee beans making the loss of
topsoil and more erosions. It needs a lot of water as well to grow the coffee beans which is
destroying the meaning of green marketing concept of Starbucks. Moreover, the disposable cups
used by mentioned firm are not fully recyclable as promised by the organisation. The substance
polyethylene, used in coating of cups to stop leakage of liquid does not allow to recycle the cups
completely. Thus another marketing tool used by company fails here to some extent. Thus,
marketing research done by Starbucks have many limitations (Brown and Cave, 2010). It
conducted the research on a particular smaller group which did not give exact results. The
research done on one country can give different result from other country which should be taken
into account. So current marketing research techniques used for contemporary marketing plans
give limited information and results.

D2 Recommendations for improving market research
The research done by Starbucks reveal that it should invest more amount in marketing.
The company's lesser amount of investment on marketing makes it down in the market and
against its rivals. The company is heavily based on feedback collected through online websites,
which need to be changed (Taylor and et.al, 2011). Cited organisation should develop other
techniques as well to collect more information and increase the scope of market research.
Further, price charged by firm is relatively higher than its rival firms. Although, due to brand
image the customers are ready to pay higher price of product yet company should consider as a
threat. In the long run, company's sales and profitability may get affected by its price element.
Moreover, company should focus on other segments of green marketing as well like packaging
and designing (Nevid, 2010). With the developments and increasing competition, firm will have
to face more challenges which needs to be forecasted and bring innovations in company's
products. Furthermore, it will require more investments also in marketing techniques besides
online media. So firm will have to focus more on its speciality area and develop other useful
techniques to increase productivity. Firm can take the advantage of brand value in improving its
marketing techniques and can move in same direction with green marketing concept (Heinonen,
2011). Cited firm just needs to focus on developing and forecasting consumer's needs by giving
less attention to its traditional techniques.
TASK 3
P5 Reasons of targeting group of customers for selected products
The group of customers are targeted for any product to induce them to buy. A company
use to target large number of customer group which involves present customers, former
customers and potential future customers as well. A customer is a person who buys the product
which can be either for his/her personal use or for someone else. On the other hand, consumer is
a person who is an end user or consumes the final product.
The Starbucks Company can have different target groups which like to have coffee
(Brown and Cave, 2010). The company can target Office going workers, teenagers, children,
aged people, high income group and some middle level income group. The company will have to
first do the market research for finding these target groups. After finding and analysing, the firm
should plan for establishing the store where these groups use to visit more. For instance, if

organisation want to target more of high income group and office going people, then company
can set up the store nearby any corporate office. In the same way, if teenagers are more focussed
for target market, then firm can establish a store nearby any college or school campus where
students and teenagers can visit more for hanging out (Santucci, McHugh and Barlow, 2012).
Thus, the mentioned organisation does the researches and select a target among which the
products of company are more consumed. After selecting the decision of setting up stores,
marketing plan, etc. are planned so that right group can be focussed.
TASK 4
P6, M3 Coherent marketing mix for new product or service
Marketing mix includes four P's of marketing which are product, price, promotion and
positioning. Starbucks use this strategy to develop a market for new product which can give
more sales and create brand image (Greenspan, 2015). So, company can go for introducing a
beverage with flavour of coffee and tea mixed in one drink which will be a new concept for
company. The development of a new product on the basis of these marketing mix elements are as
follows: Product: Company can launch a new beverage which will be a combination of flavour of
both tea and coffee in one drink. It will be made by mixing tea and steamed milk, later
finishing up with hot coffee and chocolate chips. This innovation will add anew flavour
in the beverages list. It can be served with smoothies or pastries in addition to develop
marketing of new product (Nevid, 2010). Moreover, it should target customers of age
group between 20-40 years. The right marketing should be done for popularising the
drink among teenagers and office going customers as well. Place: The Company generally use to sell its products through stores, but in this new
product, cited firm can develop method of marketing through online sale in addition.
Organisation can advertise the product online and can avail the customer to place order
for the drink online. This innovation in both product and place will help in bringing some
change in company's marketing techniques and will attract more customers (Taylor and
et.al, 2011). Promotion: The mentioned organisation uses advertising of products through websites,
oral marketing or public relations, newspapers and magazines. The strategy of oral

marketing is not of much use in recent years as the competition is high where marketing
of products through right tool is very necessary. Initially to highlight the new drink, it can
give some discount on placing order through Starbucks app. Besides this, company can
allot some freebies while purchasing the drink from stores. Moreover, company also uses
the method of Starbuck's cards to avail customers with more benefits on purchases
(Clayson and Haley, 2013). Thus through marketing of new product by different media
will help in increasing sales.
 Price: The most of the products of aforesaid company is expensive and targeted towards
high and middle level income group. So this time, firm should fix its price at a level
which should be affordable for all low to higher income group. The firm can also go
skimming the cream price strategy where it can initially fix the rate of product at
somewhat higher level to earn profits (Sheth and Sisodia, 2015). After the successful and
stable launch of product firm can lower its price and make it available for other group of
customers as well. This will make the product available to all consumers and company's
brand image will also remain high. So this innovation with different marketing elements
will target existing and former customer groups at a broader level along with attracting
new customers as well.
CONCLUSION
The present report concludes the importance of marketing techniques in every business
area. The use of correct marketing tool and research is necessary for expanding the organisation.
In the above report, comparison between marketing techniques adopted by Starbucks and
Hilton's have been done which shows the importance of targeting customers on different basis.
Further, report reveals that there are some limitations of marketing which a company should
always bear in mind and try to overcome it. Moreover, study of marketing mix done for new
product and service targeting group of customers helped in understanding the marketing
strategies that can be developed for new product. Finally, it can be concluded from the report
that, for effective marketing, organisations should always conduct proper market research and
study it’s each component that can affect the firm both positively and negatively as well.