Marketing & Management Analysis of Starbucks: Strategies for Growth

This report offers a comprehensive marketing and management analysis of Starbucks, starting from its initial business idea as a seller of high-quality coffee beans in Seattle. It explores the company's evolution, including its original marketing strategies focused on creating a 'third place' and building customer loyalty through rewards programs and FOMO tactics. The report delves into the 4Ps of marketing (Product, Price, Place, and Promotion), examining Starbucks' product offerings, pricing strategies, global presence, and promotional efforts. It then analyzes Starbucks' growth strategies, including brand extensions like Refreshers and handcrafted sodas, line extensions such as iced coffee and Frappuccino, and mobile advertising. The report concludes by outlining Starbucks' plans for future growth, emphasizing retail alignment and e-business simplification, along with strategic alliances. The report is based on the assignment brief provided and incorporates various academic sources, offering a detailed overview of Starbucks' marketing and business operations.

RUNNING HEAD: MARKETING & MANAGEMENT
Marketing & Management
Student’s Name
University Name
Author’s Note

2
MARKETING & MANAGEMENT
Table of Contents
1. Original business idea of Starbucks.........................................................................................3
1.1 History of Starbucks..........................................................................................................3
1.2 Original marketing idea of starters....................................................................................3
2. Growth......................................................................................................................................3
2.1 4 P's of marketing..............................................................................................................4
Product......................................................................................................................................4
Price..........................................................................................................................................4
Place.........................................................................................................................................5
Promotion.................................................................................................................................5
3. Preferred growth strategy.........................................................................................................6
3.1 Current growth strategy....................................................................................................6
3.1.1 Brand extension...............................................................................................................6
3.1.2 Line extensions................................................................................................................6
3.2 Plans for future growth.....................................................................................................7
4. Reference List and Bibliography..............................................................................................8

3
MARKETING & MANAGEMENT
1. Original business idea of Starbucks
1.1 History of Starbucks
Starbucks was initial setup as a partnership business with the first store opening in Seattle,
Washington in 1971.The idea was to sell high quality coffee beans and develop retail coffee
business. In the first phase of business, the company only sold roasted coffee beans and coffee
Brewing was not included in their business at all.
1.2 Original marketing idea of starters
The initial marketing idea of Starbucks was to develop third Marketplace which was a place
distance from office as well as home. They developed the Starbucks stores with convenience for
relaxing and engaging in conversations. This implies that the company had and unique
proposition statement from the initial business period. The second strategy what's the
development of brand loyalty by means of various customer engagement programs. They
followed the strategy of providing benefits to their customers for joining the rewards program
which included the likes of free refill, free drink, and birthday reward and so on. The offer for
free drinks helped Starbucks to get most people through their doors. The third most important
initial marketing strategy used by the company was the FOMO or the year of missing out. As
highlighted by Mohanbir, this had been a relevant business marketing strategy in the 1980s and
90s and even now. 60% of the millennial generation does impulse purchases, driven by their fear
of missing out. The marketing strategy of Starbucks employed time barred promotions as well as
seasonal or occasional menu. Taglines like avail the offer today is it might be gone extracted the
young customers always.
2. Growth

4
MARKETING & MANAGEMENT
2.1 4 P's of marketing
Product
The leading coffee retail brand Starbucks provide unmatchable experience especially in terms of
their coffee. Outlets of Starbucks offer whole bean coffee comma micro ground instant coffee,
Hot and Cold drinks comma Café latte espresso, full leaf tea, loose leaf tea Teavana tea products
fresh juices, lab boulange pastries, snacks life chips, crackers as well as local products like
pumpkin Spice latte. In specific Starbucks stores, pre packaged food items like tumblers for
mugs as well as Hot and Cold sandwiches, wine, beer branded ice cream as well as sealed bottle
water and sealed cold coffee drink are also available. In fact in the grocery stores of selected
areas, Starbucks salts sealed coffee and coffee beans packets.
Price
Most of the Starbucks products are of premium price former justified to the high-end
Technology, large variety along with the best and customised customer experience offered by the
brand. In order to attract customers, the organisation had initially started with low cost range in
few of the Starbucks outlets in order to increase the customers who are not attracted by the high
prices. In fact, the Starbucks products available at the grocery stores are comparatively less
priced related to the normal outlet products which can be easily availed by everyone. Starbucks,
not only followed a competitive pricing strategy, but it is evident that they also followed relative
pricing strategies. As per Roberto et al. the coffee and other beverages available at Starbucks are
also produced in packages of various sizes according to the requirement of the customer. The
variations are Demi commerce short, mini, venti, Grande tall as well as trenta. Every product is
of the highest quality that helps to maintain loyal customer base as well as brand name.

5
MARKETING & MANAGEMENT
Place
Starbucks operates in more than 70 countries. There are approximately more than 5000 licensed
store locations of Starbucks with maximum outlets in USA. The organisation has a well
fabricated website providing details regarding each and every aspect of their products, their
business pattern, their suppliers as well as there is a forum for discussion regarding the favourite
coffee of the customers, the flavour details, and the organisation also provides opportunities for
the customers to provide them with customised ideas regarding how they can improve their
product and product offering. The website also incorporates detailed menu, information about
store options, speciality stores, store locations, customer parks and benefits and so on. There are
occasional lucky draws and discount offers posted on the website and even surprise offers in the
Starbucks stores also which entices the customers to keep looking out for such offers and keep
visiting the Starbucks stores.
Promotion
Starbucks emphasizes on brand promotion, and utilizes channels like online media, social media,
printed advertisement as well as television advertisements. Starbucks has a large country
consumer network. However, in spite of that they do not fall back from the responsibility
towards customers. Glowik highlights that they generate value towards the society from the
unique premium prices paid by the customers by means of the community program like the
Swastha project and the Chai project in Asia. They also support green business initiatives like
using recyclable cups and providing monetary and business related benefits to the farmers who
are the major suppliers for their coffee, tea as well as cocoa beans.

6
MARKETING & MANAGEMENT
Other than this, Starbucks makes excellent use of online Technology like their tweet a coffee
campaign organised in 2013 comma feedback sharing platform like my Starbucks Idea, Loyalty
program like gift card and free Wi-Fi facility in the Starbucks stores and so on. Otherventures for
promotion included by the company are mobile application, storytelling as well as increasing
customer’s interest through various in store events. As per Puput Ichwatus, et al., Starbucks is a
brand which does not utilizes traditional television media more. That is why there are really any
conventional television advertisements of the company.
3. Preferred growth strategy
3.1 Current growth strategy
3.1.1 Brand extension
The recent disclosures regarding the harmful effects of caffeine consumption has created a
massive section in the society who are non caffeinated drinks consumers. Hence Starbucks are
missing out on the opportunity of capitalising on this customer segment.however, recently it
appears that the organisation is putting up and effort in order to turn those customers into loyal
customers of Starbucks by offering some brand extensions like the Refreshers energy drinks
which was launched in 2013 and new flavours of the drinks were introduced in 2015.similarly
other brand extensions include their handcrafted sodas launched in specific markets. The target
of brand extension was to have anything or the other to offer for any kind of beverage customer.
3.1.2 Line extensions
The organisation introduced their first line extension in the form of Starbucks iced coffee.
Nevertheless, the immense success of this market venture allowed them to introduce two other

7
MARKETING & MANAGEMENT
line extensions in the form of Starbucks Doubleshot and bottled Starbucks Frappuccino which is
to be sold in other grocery and departmental stores also, alongside the Starbucks outlets.
3.1.3 Advertising strategy
Starbucks is using mobile advertisement for the last few years for promoting their product and
services. The mobile advertisements are all call provided with links to the service website and
shoes GPS napping to identify Starbucks stores nearby without being prompted by the user. As
per Garthwaite, the organisation also allows sharing of product pages through Facebook and
Twitter.
3.2 Plans for future growth
In order to develop our repositioning plan for the company for ensuring future growth, two
strategies have been highlighted in their annual business plan which determines continuation of
growth. The first is involvement of retail alignment which will ensure that the company
maintains correct number of stores and investment capital in different Global markets. The
second futuristic initiative of the company will be e business simplification as well as inclusion
of divestment for slower performing parts of their business like Teavana tea retail stores in China
as well as USA, Tazo tea as well as enter into alliances with organisations like Nestle.

8
MARKETING & MANAGEMENT
4. Reference List and Bibliography
Chapter, Why Read This. "ONE COMPANY’S PERSPECTIVE ON INNOVATION–
STARBUCKS COFFEE, CIRCA 2006." Accelerating New Food Product Design and
Development(2017): 105.
Garthwaite, Craig, et al. "Starbucks: A story of growth." Kellogg School of Management
Cases (2017): 1-20.
Glowik, Mario. "4.7 Case study: Starbucks." Global Strategy in the Service Industries:
Dynamics, Analysis, Growth (2017): 156.
Ragozzino, Roberto, Jeffrey J. Reuer, and Lenos Trigeorgis. "Real options in strategy and
finance: Current gaps and future linkages." Academy of Management Perspectives 30.4 (2016):
428-440.
Sawhney, Mohanbir. Starbucks: Driving growth through new dining occasions. Kellogg School
of Management, 2018.
Sholihah, Puput Ichwatus, et al. "The Strategy of Starbucks and it's Effectiveness on its
Operations in China, a SWOT Analysis." Asian Journal of Business and Management (ISSN:
2321–2802) Volume (2016).