Starbucks Marketing Strategy Analysis

This assignment delves into the successful marketing strategies employed by Starbucks. It examines the company's use of gamification to enhance customer engagement, a SWOT analysis to identify its strengths, weaknesses, opportunities, and threats, and various loyalty programs designed to cultivate customer loyalty. The analysis draws upon research papers, case studies, and Starbucks' official website to provide a comprehensive understanding of their marketing approach.

Running Head: Understanding and Leading Change
Starbucks Corporation
Understanding and Leading change

Understanding and Leading Change 1
Table of Contents
Introduction......................................................................................................................................2
Task 1...............................................................................................................................................3
Starbucks’ operational strategies.................................................................................................3
Changes which could affect the Starbucks’ performance............................................................5
Influence of drivers of change on the organizational behaviour..................................................6
SWOT analysis of Starbucks.......................................................................................................6
PEST analysis..............................................................................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
Starbucks Corporation is a well-known multinational coffee brand. It is an American coffee
corporation and this network contains large number of coffee chains. It was founded by Jerry
Baldwin Zev Siegl and by Gordon Bowker in 1971. From that period, organization has
developed a unique image at the global level. Starbucks is not just famous for its coffee joints,
the atmosphere provided by the Starbucks is so unique which cannot be created by any other
brand. Along with the treasured coffee served by the Starbucks to its consumers, they also
provide the treasured atmosphere and the exclusive comfort level through which organization has
developed a distinctive image. The primary offerings of the café are newsstands; varieties of
coffee along with numerous flavours, Wi Fi facility, and the like are various facilities which
make the Starbucks unique from other coffee parlours.
Starbucks provides various food items, cold drinks and tea products in order to attract the large
segment of the audience. But their major concern is providing dark roasted coffee to its
consumers in order to maintain the distinctive image as the superior coffee joint across the globe.
Motive behind the Starbucks’ operations are inviting people to spend the quality time with their
loved ones, for providing the treasured experience to the people through which an effective
image has been developed. Chain of Starbucks is situated in approximately 26,000 store
locations along with the 200, 000 employees across the all locations. Its headquarters is situated
in Seattle, Washington, U.S. With its effective operations, organization stands on the 3rd position
across the globe in terms of fast food restaurant chain network. Handcrafted smoothies and
beverages, fresh brewed coffee and other fast food items such as cakes, pastries and sandwiches
are some of the major attractions for the store (Starbucks Corporation, 2018).

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The primary aim of the report is to analyse the impact over the organizational performance due
to changes in the business environmental conditions. Along with this, impact over the
organizational strategies and on the operations will be determined with affect to large scale
changes. The next phase of the report will include the barriers which influences the decision
making of the leaders in order to mould the outcomes of the organization on the basis of the
requirements.

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Task 1
This task will cover the various ways through which change impacts over the performance,
strategies and over the operations of the organization. Apart from this, this task will also include
the information regarding the impact of drivers of changes on the behaviour and the workplace
environment of the organization (Cannoy & Salam, 2010).
The major effect over the organizational performance is created by the introduction of the new
rules and regulations by the government authorities, with the effect of natural calamities and with
the effect of strategies implemented by the competitors. In order to attain the effective results,
Starbucks has implemented crucial strategies through which the expansion related objectives
could be attained adequately. According to the case study, in 19978, Starbucks entered the
European market with the help of acquisition with 65 Seattle Coffee Company based in UK. 65
Seattle Coffee Company in UK and Starbucks in America, both are known for delivering high
quality coffee along with comfort and ambience. Merger of these two companies helps the
Starbucks to establish an effective position in the European market and this lead the organization
to attain its goals and the objectives in relation with setting up the effective presence in the
global market (Chang, Chen & Lan, 2013).
There are numerous ways through which change in any strategy, environment’s conditions or in
the policy of the government could affect the business’ performance in various manners. Change
could affect the organizational working procedures, strategies as well as the operations. This may
affect the productivity; loss of customer base as well as the position in the market would also be
affected with the change in the above mentioned factors (Hajli, 2014).

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Starbucks’ operational strategies
 Expansion in product offerings: Starbucks’ main motive is to enhance its product
offerings in order to provide huge range of products and beverages for satisfying the
target audience’s needs. Apart from this, this strategy is also useful in relation with the
accomplishment of the desired targets. Starbucks has appointed a team which mainly
executes the functionalities such as marketing analysis, consumer’s demand and
requirement and the team is also responsible for analysing the latest trends, consumer
behaviour and their preferences. With the help of this analysis, organization is able to
determine the crucial objectives in relation with the consumer’s demand through which
the appropriate strategies and the plans could be made with regards to accomplish the
goals. Providing a large choice to the consumers with regards to their choices,
organization would be able to enhance their revenues as well as the profitability. Apart
from this, organization has also adopted the strategy under which distribution units and
the channels of the company will be expanded. This will help the target audience to get
their desired products and services easily and effectively. For the same reason,
organization has opened their outlets in various attractive locations in the market. Along
with this, they had opened their outlets in the reputed hotels, cafeterias of theatres, flights
such as United Airlines and United Airlines, and the like (Huotari & Hamari, 2012).
These are certain effective strategies which have been adopted by the Starbucks to
enhance their market base, market share and to increase the growth opportunities. These
strategies are also useful for effectively approaching to the people as well as for
developing a unique image in the target audience’s mind-sets.

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 Introduction of new products and services: Starbucks has also implemented the
strategy of introducing the new products and services in the target market with the motive
to enhance the customer base. Organization has increased their menu range and in
relation with the product line extension, tea beverages, varieties of local food and other
attractive things have been launched for increasing the customer base. This has helped the
organization to gain the market share along with developing a unique image in the target
market. Seattle’s best coffee and the Ethos water are also been included in the menu list
of Starbucks with the motive to enhance the demand of their products and to expand their
business in the international market. For increasing the menu range, Starbucks has done
several agreements with reputed brands such as Kraft, PepsiCo and Tazo Tea. This has
also helped the organization to attract the large number of customers along with
increasing the revenues and the profitability. Along with this, the strategy of introducing
the new products for providing the variety of offerings to the consumers, Starbucks has
signed agreements with PepsiCo and Kraft to serve their products in their café. Along
with the distribution of wide number of products, organization will be able to attain its
goals and the objectives and it has also helped them to attain the competitive advantage in
the target market (Krishnamurthy, SivaKumar & Sellamuthu, 2010).
 Quality: Quality and the taste have been the most important parts of the Starbuck’s
coffee and other products served in the café. These factors are useful for increasing the
customer base, satisfying the customer base as well as it is also useful in the process of
increasing the satisfaction level of the consumers. Providing qualitative products and the
services is useful in relation with the retention of the potential consumers along with
gaining the new segment of the audience. This is the major reason; organization is being

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able to open more than 26,000 stores worldwide along with a huge customer base. In the
fast food industry, quality of products served to the consumers plays crucial role in the
success and the failure. Thus, in order to attain the goals and the objectives, Starbucks has
implemented this strategy (McKenzie-Mohr, 2011).
 Pricing Strategy: Prices of the Starbuck’s products and services are bit high in
comparison with the other brands available in the same industry. Still the customer base
of Starbucks is huge in comparison with the other brands’. The major reason behind this
is the goodwill created and developed by the organization in their customer’s mind-sets’
through serving them appropriate qualitative products and services. Along with this, it is
important for the organisation to understand the target audience’s needs and requirements
and Starbucks has implemented this strategy in order to accomplish is goals and the
objectives in addition with satisfying their needs. Starbucks has implemented the cost
leadership and product differentiation strategy in order to maintain their product’s
effectiveness and the demand. Strategies implemented by the organization are quite
effective in relation with increasing the demand of the consumer’s products as well as it
is effective in order to distinct their products with its competitors’. With the help of these
strategies, organization is being able to uplift its performance in the international fast
food industry; hence, they are the third largest fast food chain worldwide (Schultz, 2012).
Apart from these strategies, organization’s operations are planning, implementing, analysing,
controlling and the measuring. Operations of the organization are quite similar with other
ventures but the standards and policies developed by the management helps the organization to
make their unique and distinct position in the market. Changes in the external environmental

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conditions affect the business’ performance because its operations get affected. With the effect to
influence of change over the organizational performance, their desired goals and the objectives
will be affected.
Changes which could affect the Starbucks’ performance
 New Entrants: The factor which could affect the organizational performance is the entry
of new companies in the fast food industry. This will affect the business of the Starbucks
as well as it will also affect the demand of their products. Customer base and the market
share of the organization will be affected along with its strategies and the operations.
Change is also required for adopting innovation and for increasing the effectiveness of
the existing products and services. Change is the factor which directs the organization to
build more effective strategies in relevance with the new entries in the industry. This will
help the organization to maintain their distinctive image in the target market along with
this; it will also help them to ascertain the opportunities in order to attain the goals and
the objectives (Udo, Bagchi & Kirs, 2010).
 Market risks: This is another crucial factor which could affect the business
performance. Market risks such as inflation, deflation, recession and other situations
which could affect the performance of the organization in financial terms. When these
situations occurs, organizational strategies and their operations may get affected which
directly affect the profitability and the revenues. When economic condition of a country
declines, purchasing power of the consumers and other related authorities decreases and
this will affect the business of the organization. Starbucks is an expensive outlet in the
fast food industry in comparison with the other outlets and in the critical situations such

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as decline in the economic conditions of the target market, reduction in the purchasing
power of the consumers, etc. will directly influence the Starbucks’s performance. It has
been analysed that people spend over leisure, comfort, quality when their economic
conditions are good and in such conditions where consumer is not able to buy the
necessity goods for survival, demand for the expensive goods, services and for other
luxurious items decreases (Ugbomhe & Dirisu, 2011).
 Competitors and their strategies: Major and primary competitors of Starbucks in UK
are Costa Coffee Café Nero where, Costa Coffee is the leader in the particular market. It
has been observed that the demand of the coffee in UK is rapidly increasing by 10%
annually and with this effect, number of coffee shops and parlours are also increasing
rapidly. But as Starbucks, Cost Coffee and Café Nero are premium coffee stores, hence,
their business do not get much affected by local and small coffee shops or stores. Costa
Coffee has approximately 2000 outlets in UK and 200 were set up in the last year only
with the motive to increase thee revenues and a 15% hike in the revenues were detected.
Starbucks and Café Nero have developed their unique presence in the UK market but the
leader of the industry is Costa Coffee. Starbucks and Café Nero have 700 and 900 outlets
respectively in the target market and both the stores stands on the respective positions
after Costa Coffee (Wilson, et. al., 2012).
Influence of drivers of change on the organizational behaviour
The challenges which lead to the innovation for overcoming with the challenges and for
increasing the organizational performance are known as drivers of change. Drivers of change

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could be internal as well as external. Following are certain important external drivers of change
which affects the organizational behaviour:
 Customer based drivers: This factor includes the change in the customer’s taste,
preference and in their demand. This could affect the organizational performance as well
as the behaviour within the workplace will also be affected. Thus, it is required to adopt
certain dynamic strategies which could be moulded on the basis of customer’s
requirements and on the basis of outcomes originated from the market analysis.
Customer’s requirement changes on the basis of various factors such as trends of the
market, product offerings by competitors, and the like (Penumarti, et. al., 2017).
 Technology based drivers: Improvement in the technology may also affect the business
performances and especially those businesses whose operations are majorly based on
technological factors. In order to cope up with the market’s requirements and for meeting
up with its target audience’s demands and the needs, it is required to adopt the latest
technologies as it will also help the organization to enhance its performance (Mann, Byun
& Li, 2015).
 Competitors based drivers: Strategies used by the existing competitors to attract the
target audience and entry of new entrants could affect the Starbuck’s performance and
these actions generate the opportunities to adopt the innovation in order to maintain their
separate place.
 Government based drivers: Amendments in the government’s policies, rules and
regulations may affect the organizational functionalities. For instance, introduction of a
new rule under which tax rates on the coffee seeds and over the coffee products will be

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raised to 30% from 15%. This will increase the cost of the production for the organization
and along with this, it will also lead the organization to increases the final price of their
products. Due to increase in the prices of the products, demand of the coffee may
decrease and the revenues of the organization will get affected. Thus, it is required to
adopt certain effective strategies through which organization could be able to provide its
products and services at affordable rates (Reinhard, 2015).
SWOT analysis of Starbucks
Strengths
 Starbucks has more than 6500 stores in
approximately 29 countries with more
than 200,000 employees.
 Wide range of products along with the
exclusive quality (Rossing, Johansen &
Pearson, 2016).
 Effective brand image in the overseas
fast food industry (Sisson & Bowen,
2017).
 Well established goodwill and majorly
known for providing varieties of coffee,
beverages and other food items along
with ambience and comfort.
 Organization has strong ethical values
Weaknesses
 Due to premium coffee store,
organization’s target audience is
limited.
 Cost of production of the company is
bit high in comparison with its rivals
and this is the major reason for high
selling process of their products.
 Organization is known for introducing
innovative products and services but
sometimes, organization get failed to do
so which leads to dissatisfaction to its
audience (Campbell & Helleloid,
2016).

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and it follows the motive of “Starbucks
is dedicated to a role of environmental
leadership in all sides of our business.”
Opportunities
 The major opportunity of the company
is to expand its business in the overseas
market.
 Living standards of the countries are
increasing rapidly and in those
countries, Starbucks could easily set up
its position.
 Invention of new technologies through
which the coffee and other products
could be served with in an effective
manner in order to fulfil the consumer’s
demand effectively.
Threats
 Entry of the new companies with
effective strategies.
 Delivering appropriate qualitative
products and services by consumers at
cheaper rates by its competitors.
 Imposition of taxes over coffee and its
related products will affect the demand
of the Starbucks’ products (Ferreira,
2017).
 Aggressive promotional strategies used
by its primary competitors such as
Costa Coffee and Café Nero.
PEST analysis
This tool has the efficiency to determine the external factors’ impact over the organizational
behaviour. Following are some of the elements which act as the external drivers for change
which affect the organizational behaviour:

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 Political: In order to maintain the same quality of its beverages and food products,
Starbucks purchases the raw materials from its source country but due to political rules
and regulations, operations of the organization get affected. With this effect, organization
needs to follow those policies, laws and regulations in order to buy the raw materials
(Leigh & Pershing, 2006).
 Economic: Economic factors such as local currency exchanges rates, economic
conditions of the domestic markets and the taxation level affect the organizational
pricing strategies and this leads the organization to invent certain effective strategies in
order to match up with the dynamic economic conditions.
 Social: Social factors plays crucial role in the Starbucks’ success as it is a part of fast
food industry. These factors are consumer’s preferences, lifestyle of the target audience,
and the like. Organization needs to ascertain the innovative ways in relevance with
enhancing the performance of the organization along with gaining the competitive
advantage (Mason, Cole & Goza, 2017).
 Technology: improvements in the technological factors, invention of new methods and
products, and other inventions help the organization to increase its effectiveness along
with accomplishment of the desired targets (Uysal & Katipoglu, 2015).

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Conclusion
From the aforesaid information, it could be concluded that the Starbucks strategies and
operations are effective enough to ascertain the strategies for increasing their effectiveness. This
has helped them to gain a large customer base across the globe and along with this; they are
known for delivering the best quality coffee and other food materials to its target audience. In
this report, organization’s strategies, operations and other factors are discussed. Apart from this,
the report also concluded the influence of drivers of change over the organizational
functionalities. The last part of the report included the strengths, weaknesses, opportunities and
threats of the organization through which the opportunities could be extracted in order to
enhance its performance in the target market.

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References
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Understanding and Leading Change 16
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https://www.starbucks.co.uk/about-us

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