Marketing Principles Report: Starbucks Coffee House Analysis

This report provides a comprehensive analysis of Starbucks' marketing strategies, focusing on key marketing principles and processes. It begins with an introduction to marketing concepts and their application to Starbucks, followed by an examination of the elements of the marketing process, including environmental scanning, strategy formulation, and implementation. The report delves into the benefits and costs of a market orientation for Starbucks, analyzing both the micro and macro environments affecting its operations. It then proposes segmentation criteria, targeting strategies, and positioning options for Starbucks' products. The analysis extends to buyer behavior in different buying situations and its impact on marketing activities. Furthermore, the report explores the development of products to sustain competitive advantage, distribution strategies for customer convenience, pricing strategies, promotional activities, and the extended marketing mix. The report also includes a discussion of planning marketing mixes for different segments, the differences between marketing to businesses and consumers, and the differences between international and domestic marketing. Finally, the report concludes with a summary of the key findings and recommendations, along with a list of references and illustrations.

Marketing Principles
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Elements of the marketing process (1.1)......................................................................................3
Benefits and costs of a marketing orientation (1.2).....................................................................4
Analyse Macro and Micro environment (2.1)..............................................................................5
Propose segmentation criteria (2.2).............................................................................................6
Target strategy (2.3).....................................................................................................................6
Positioning options (2.5)..............................................................................................................7
Buyer behaviour affecting the marketing activities in different buying situation (2.4)...............8
Product should be developed to sustain competitive advantage (3.1).........................................9
Distribution is arranged to provide customer convenience (3.2).................................................9
Pricing strategy as per marketing condition (3.3)......................................................................10
How promotional activities should integrated to achieve marketing objectives (3.4)...............10
Additional elements of extended marketing mix (3.5)..............................................................11
TASK 2..........................................................................................................................................12
Plan marketing mixes for two different segments (4.1).............................................................12
Difference between marketing product to business rather than consumers (4.2)......................12
International marketing to domestic marketing (4.3)................................................................12
CONCLUSION .............................................................................................................................13
References......................................................................................................................................14
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Illustration Index
Illustration 1: PEST analysis............................................................................................................7
Illustration 2: Marketing mix elements..........................................................................................13
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INTRODUCTION
In the contemporary environment, marketing is considered as an effective process which
mainly focuses on stimulating the demand of different merchandise in order to create, preserve
and increase the share in market (Solomon and et.al., 2014). Marketing strategies must be used
by the organization to market their products and services in the marketplace. However, it is
termed as procedure where enterprise bring the product in market and achieve the key objectives
that is satisfying customers with increasing profit ratio. For carrying out the report, the chosen
organization is Starbucks which is one of the renowned coffee-house companies that mainly
serve variety of hot and cold beverages to the customers. Furthermore, the report focuses on
understanding marketing concepts as well as process of marketing so that marketing manager of
Starbucks can easily use the concepts of segmentation, targeting and their positioning.
TASK 1
Elements of the marketing process (1.1)
According to Chartered Institute of Marketing (CIM), marketing concept is not just about
selling of products in the market (Sanchez-Hernandez and et.al., 2013). Business organization is
required to consider different concepts of marketing and their significance regarding achieving
their objectives. The different element of marketing process includes -
1. Marketing Environment Scanning: One of the key elements in marketing process
includes scanning of the environment under which Starbucks operates their operations.
The marketing manager must focus on scanning the environment that support them in
knowing the market area as well as existing forces which impact the organization.
However, it mainly includes analysis of micro and macro environment factors which
consist of suppliers, organization and customers (Hollensen, 2015).
2. Marketing Strategy: Another element of marketing process is formulating marketing
strategy. Marketing manager of Starbucks after measuring the environment is required to
develop or plan marketing strategies so that it may sustain in the market. It mainly
includes methods like segmenting, targeting and positioning of the products.
3. Marketing strategy implementation and evaluation: Once the strategy is formulated, it is
then implemented to observe the practical results (Dibb, 2010)). Thereafter, the actual
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results are evaluated with the desired outcomes to assess whether there is a need for
improvement or not.
Benefits and costs of a marketing orientation (1.2)
Market orientation is an situation that primarily defined as measuring or researching the
overall market as well as taking feedback from their customers, reviewing the strategies of
competitors so that organization may deliver quality product according to the demand of their
customers (Walsh and et.al., 2010).
However, cost benefit analysis assists in determining that actions undertaken by the
organization have been advantageous to organization or not. The benefits and costs of marketing
orientation of the Starbucks are:
1. With the help of market orientation, marketing manager of Starbucks can easily assess
the market under which they are operating their operations and services so that they can
leave an eternal impression on their target customers by providing them with superior
quality product (Goyat, 2011).
2. However, another benefit of market orientation is that it results in driving constant
change within the product and services of Starbucks so that they can meet the changing
requirement and demand of the customers.
3. Another benefit is that it helps in satisfying their customers by focusing on modifying the
product design through measuring competitor’s products (Luan and Sudhir, 2010).
Certain costs associated with marketing orientation include:
1. In order to accomplish the successful marketing orientation process, marketing manager
of Starbucks is required to use resources for conducting the marketing research.
2. Marketing orientation also brings a sort of rigidity since it focus on the pre-planning
within the product development (Powers and Loyka, 2010). Moreover, the customer’s
tastes and preferences keeps on changing within the certain time period. Therefore,
marketing manager of Starbucks needs to remain update regarding the requirement and
demand of the customers to sustain in the competitive market.
Analyse Macro and Micro environment (2.1)
There are different techniques available in the market that supports the marketing
manager of Starbucks in analysing and measuring micro as well as macro environment that affect
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the marketing decisions (Lovelock, 2011). For developing an effective marketing plan,
marketing manager of Starbucks must focus on SWOT analysis to analyse the internal strength
and weakness of the Starbucks as well as it will also determine opportunists and threats that are
available for the Starbucks.
Strength-
 One of the largest coffee house in the
world
 Strong financial performance
 High accessibility
 High quality coffee products and
beverages
Weaknesses-
 Mainly depend upon the US segment
 Increasing the prices of coffee beans
 Mainly target food and beverage
segment
Threats-
 Increasing competitors within the
coffee beverage businesses
 Fluctuating economic condition leads
in decreasing the spending of the
customers
Opportunities-
 Diversification in different segment
 It can expand the activities or stores in
the Asian market
 Innovation in the products
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PEST analysis is one of the technique that assist in measuring and understanding the
external factor existing outside the organization that primarily affect the operations of Starbucks
(Griffith, 2010). The different external factors are:
1. Political factors: Political factor include governmental taxes and subsidies on the items of
foods and beverages. However, this factor mainly affect the decision of Starbucks in
manufacturing different beverage that might attract the customers.
2. Economic factors: The economic factor include inflation rate, economic growth that
mainly impact the operation of Starbucks in the country. For instance; if any of the
branch of Starbucks is operating in the U.S as at time of recession in the country it will
impact the purchasing power of the customers that results in occurring financial loss for
the company (Valette-Florence, Guizani and Merunka, 2011).
3. Socio cultural factors: If individual or customers of UK have attitude to drink the coffee
then Starbucks may set up their store in such field. For instance, customers of UK highly
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Illustration 1: PEST analysis
(Source: The marketing environment, 2012)

prefer to taste new beverages from time to time thus, operating coffee house in UK is
consider as significant aspect that affect their operations (Hastings and Angus, 2011).
4. Technological factors – Nowadays, with the advancement in the technology coffee
makers are accessible to the customers of UK. With the advancement in technology will
pose danger for the Starbucks as customers will consume the coffee at their home by
instant coffee maker.
Propose segmentation criteria (2.2)
Segmentation mainly refers to the activity that focuses on the bifurcating the whole
market into different segment that having similar demand. The main aim of segmentation is to
determine the customers with different requirement and demands. Thus, marketing manager of
Starbucks segment the whole market so that they can design marketing mix that matches the
demand of the targeted segment. Since, the Starbucks is mainly target the demographic
segmentation on the basis of age group that is 18-35 who mainly belong to medium to high
income level group (Rosenbloom, 2011). The major portion the Starbucks revenue is generated
through this segment customers. Thus, the company introducing the new coffee product mainly
known as coffee latte will mainly target this age group to serve the new beverage.
However, marketing manager of Starbucks may incorporate certain changes in their
segmentation criteria if the once their sales got constant increase and even getting good response
from the customers that further add and enhance the sales of their new beverage in the precise
manner.
Target strategy (2.3)
Marketing manager of Starbucks after segmenting the target market they must focus on
selecting different targeting strategies so that they can easily meet the requirement of the
customers. Target strategy for any product means plan of action whereby organization attempts
to affect the demand for their beverages products with the main aim of increasing their profits,
encouraging growth and enabling customer satisfaction (Ataman, Van Heerde and Mela, 2010).
After determining the target segments, the succeeding step is to chose the effective targeting
strategies from the below described strategies that are as follows:
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1. Differentiated- under this targeting approach marketing manager of Starbucks may use
planning different promotional and advertising messages so that they may satisfy
different segment.
2. Undifferentiated- Another targeting strategy is defined as undifferentiated strategy under
which Starbucks focuses on designing one promotional strategy for all the segments. For
instance, Starbucks promoting their new range of coffee products via newspaper (Paul
and Bihani, 2014).
3. Concentrated- Another targeting strategy is defined as concentrated strategy under which
marketing manager of Starbucks design single promotional strategy to benefit the
particular segment of Starbucks.
In order to target different segment customers marketing manager of Starbucks mainly
chooses undifferentiated targeting strategies to target their customers.
Positioning options (2.5)
After targeting marketing manager of Starbucks focuses on positioning of the product so
that they may attain competitive edge from their rival companies. Positioning is defined as an
essential approach that focuses on continuing positive image of Starbucks and their products in
the mind of their customer (Czinkota and Ronkainen, 2012) However, if once product misplace
its position in the market then within the contemporary environment it becomes highly difficult
for the Starbucks to restore their position in the coffee beverage segment. Therefore, in order to
make its merchandise approachable to broad mass of targeted section, marketing manager of
Starbucks can focuses on different positioning strategies that is-
 They may adopt aggressive promotional techniques to target broad customers so that they
may prefer to choose their products and services.
 They may also exploit different modes ad mediums through which Starbucks can
publicize their services and products to the different segment customers.
 Being the leading coffee house they may also provide effective ambiance of the coffee-
house so that customers feel to visits the place frequently (De Lencastre and Côrte-Real,
2010).
 Another positioning strategy that may be used by Starbucks include that they must target
the crowd area for their presence so that customers can easily access to the place.
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However, the location of Starbucks may also focus on presence of least competitors
(Henley, Raffin and Caemmerer, 2013).
 For positioning the product marketing manager of Starbucks must concentrate on the
various set of tactics for different segment that is to target young group manager must
provide coffee products and beverages product in the low price so that youngsters can
easily purchase in their income. This will help Starbucks in boosting the sales of their
coffee products and beverages items in the market (Richards, 2012).
Buyer behaviour affecting the marketing activities in different buying situation (2.4)
Buyers are the one to whom Starbucks renders their products and services they are also
know as ultimate targets for whom company designed different marketing strategies so that they
may satisfy them. Therefore, Starbucks corporation should keep their target audience in mind
their mind while targeting them. However, it has bee stated that buyer behaviour mainly affect
the marketing activities of the Starbucks (Suttle, 2013). If the marketing actions are not planned
in effective way so that they may persuade their customers to purchase their products, then the
whole attempt of the company will turn in vain. Starbucks to render the new coffee range ad
beverages items in the market they must attempt to analyse the buyer behaviour in command to
get a perception of their targeted audiences tastes and preferences. Therefore, it will assist the
marketing manager in devising effective marketing strategies that direct influences the minds of
target audience. For instance, in order to encourage its new range of coffee products among the
youngsters and college going students, it is constitutional for marketing manager to understand
the customers psychology for designing and planning effective marketing strategies like
advertising and publicity via using social websites, enabling hoardings within the college area etc
(Target Market, 2013). as youngsters mainly prefer to visits the internet sites on the ssregular
basis thus, they may also provide additional benefit for the online customers. further, projecting
the promotional and advertising campaign, marketing manager of Starbucks may also attempt to
program their advertisement strategies in a effective way that they may highlight the features of
commodity that are provided by the organization (Target Marketing, 2013).
Product should be developed to sustain competitive advantage (3.1)
The foremost element within the marketing mix approach is termed as product. Product is
the one that satisfy the expectation and demand of the customers. Starbucks mainly provide
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range of products and services to the customers so that they should sustain in the competitive
environment (The marketing environment, 2012). The range of products that Starbucks serve to
their customers include espresso, latte, hot and cold beverages etc. that assist the company to
sustain its position. In the competitive marketplace there are different products available in the
market that assist them in gaining competitive edge among their rival companies. Thus,
marketing manager of Starbucks must focus on modifying or amending their products that is
beverages and sacks items so that they must add new attribute to the products so it may attract
different segment customers.
However, marketing manager of Starbucks may also focus on expanding their product
line that is primary the corporation focuses on coffee latte but in the competitive scenario, they
modify the flavours in the latte so that they may expand their product line. In addition to this,
they may also focus on the product diversification strategy where Starbucks should develop new
product in the new market so that it may result in increasing their market share (The Relationship
Between Business Strategy and Marketing, 2012).
Distribution is arranged to provide customer convenience (3.2)
Other essential element within the marketing mix include arranging place or location
through which Starbucks can easily distribute their products and beverages items to the
customers in minimal cost. As, Starbucks mainly serve different variety of coffee and other
snacks to the customers thus, there are different options available for the Starbucks to distribute
their products so that they may provide convenience to their customers (Solomon and et.al.,
2014).
 They must focus on door to door delivery of their beverages items so that they may attain
customer satisfaction.
 Another method of distribution include certain online sites for distributing their products
as it will result in saving the cost as well as it is an convenient form of distribution
systems (Sanchez-Hernandez and et.al., 2013).
Pricing strategy as per marketing condition (3.3)
Price is also consider as a key element of the marketing mix that is defined as worth or
the total value of the product that customers pays to the organization in the exchange with the
product (Hollensen, 2015). Customers pays the worth of product earlier purchasing the beverages
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product from the Starbucks. Price plays a constitutional function within the organization as it act
as monetary value of the products result in determining the profit and loss of the corporation.
Therefore, marketing manager of Starbucks must fixed the prices of their merchandise and coffee
products so that it may accomplish the organizational objectives that is to fulfil the requirement
of customers by providing superior quality hot and cold beverages as well as snacks items within
the less cost. There are basically two form of pricing that is being used by the marketing manager
of Starbucks that is-1. Price skimming: Skimming pricing scheme defined as an pricing plan of action under
which marketing manager of Starbucks initially set the high prices of the coffee products
ad the later on reduces the prices of product ad beverages (Dibb, 2010). Basically this
strategy has been set to reflect the organizational objectives and market condition.
Therefore, the main aim of selecting this pricing strategy is to recover the cost of
corporation and to earn higher profit.
2. Premium pricing strategy: For setting the prices of coffee items and snacks Starbucks
may also prefer using premium pricing strategy (Walsh and et.al., 2010). As, the
corporation is the known brand in the world that focuses on setting the premium price for
the coffee products. The Starbucks while using superior pricing strategy comparatively
put the high monetary value for their items that they serve to their customers.
How promotional activities should integrated to achieve marketing objectives (3.4)
Promotional activities of the product is consider as other impressive element within the
marketing mix. By following impressive advertising scenario and activity, Starbucks Corporation
must render adequate information regarding their new coffee products of the Starbucks to their
targeted customers that result in achieving the overall goals of company as well as their
marketing objectives (Luan and Sudhir, 2010). Advertising: It is well-advised as an essential and crucial activity for encouraging and
assisting new coffee merchandise within the marketplace. As, the corporation has the
famed brand name within the global marketplace thus advertising activity result in
boosting and promoting their coffee products information via digital medium that is
radio, TV, websites, online sites etc. Therefore, advertising is considered as an
impressive promotional technique that need to be merged by marketing manager of
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