Marketing Principles Report: Starbucks and Marketing Strategies

This report provides a comprehensive analysis of Starbucks' marketing principles and strategies. It begins with an overview of the marketing process, including situation analysis, marketing strategy development, marketing mix decisions, and implementation and control. The report then examines the benefits and costs of a marketing orientation approach for Starbucks, highlighting the company's use of market research and various marketing channels. The influence of macro and micro environment factors on Starbucks' marketing decisions is explored using SWOT, Porter's Five Forces, and PESTL analyses. The report further delves into Starbucks' segmentation criteria (demographic, behavioral, geographic, and psychographic), targeting strategies, and the impact of buying behavior on marketing activities. The report also discusses product development, distribution channels, pricing strategies, promotion integration, and the extended marketing mix. Finally, the report examines the planning of marketing mixes for different segments and explores the differences between marketing products and services to businesses versus consumers, as well as the differences between domestic and international marketing.

Marketing Principles

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................4
TASK 1............................................................................................................................................4
1.1 Exploring the various elements of marketing process...........................................................4
1.2 Benefits and costs of a marketing orientation approach for selected company.....................4
2.1 Influence of macro and micro environment factors on marketing decisions ........................5
2.2 Segmentation criteria to promote products in different market segments.............................8
2.3 Effective use of targeting strategy for a selected product/service ........................................8
2.4 Impact of buying behaviour on marketing activities in different situations..........................9
2.5 Effective use of new positioning strategy to promote products.............................................9
3.1 Ways of product development to sustain competitive advantage .........................................9
3.2 Arrangement of distribution channels to increase customer convenience ..........................10
3.3 Impact of prices on an organization’s objectives and market conditions ............................11
3.4 Integration of promotion strategy to achieve marketing objective......................................11
3.5 Additional elements of the extended marketing mix ..........................................................11
TASK 2..........................................................................................................................................12
4.1 Planning of marketing mixes for two different segments ...................................................12
4.2 Exploring differences in marketing products and services to businesses rather than
consumers .................................................................................................................................12
4.3 Difference between domestic and international marketing..................................................13
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
In order to promote products and better perform in the market as compared to other
competitors it is essential for the organizations to concentrate on marketing principles. Starbucks
has been taken for the purpose of understanding fundamental concepts and principles which can
influence marketing process of the enterprise. Besides that, present report provides information
about various topics including segmentation, targeting, positioning, promotional mix and
environment scanning that can influence buying behavior of an individual. By applying these
fundamental concepts of marketing in a systematic manner, organization can meet customer '
wants and can increase their profit margin also.
TASK 1
1.1 Exploring the various elements of marketing process
The Marketing process followed at Starbucks is inclusive of following steps; Situation Analysis - By the very first step of this process, the marketing team at
Starbucks makes an attempt to analyze the situation of company (Wise and Sirohi, 2005).
It helps the firm in identifying opportunities and further it helps in satisfying the needs of
customers by emphasizing on past, present, and future aspects of customers. Marketing Strategy – This step is all about devising strategies related to segmentation,
targeting as well as positioning of the product in target market (Martin, 2009). This will
help the marketing team to create a value proposition for Starbucks. Marketing Mix Decisions – In this step, the marketing team at Starbucks decides what
product to be introduced, price to be set, contracts regarding distribution as well as
promoting the service offering in the best possible manner.
 Implementation and Control – This step entail for analyzing marketing effort in a closer
manner so as to make necessary changes. These can be related to product redesign or
distribution channels (James, 2012). Once the process is implemented it is further
subjected to continual monitoring and adaptation.
1.2 Benefits and costs of a marketing orientation approach for selected company
In order to design desired quality of product and meet expectations of customers,
marketing strategies used by Starbucks are helpful for it. Besides that, enterprise is taking
benefits from market orientation approach and they can effectively use their core capabilities and
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can better perform better compared to other business rivals (Cohen, 2005). For collecting
information about customers in order to better understand needs & taste of them, enterprise has
invested huge amount in money in the market research activities. Along with this, company is
also emphasizing on both traditional and modern media marketing channels which includes TV,
social media and email marketing to cover large geographic area to increase awareness among
people (Ceylan, 2008). Hence, it can be said that for the purpose of measuring customer
satisfaction systematically and frequently, market orientation approach can be beneficial for
Starbucks.
2.1 Influence of macro and micro environment factors on marketing decisions
Marketing decisions of Starbucks are influenced by both internal and external
environment factors that can be understood in details with help of applying porter and PESTL
models.
SWOT analysis:
Table 1: SWOT analysis of Starbucks
Strengths
 Global coffee brand. With their
goodwill and market image they are
able to strengthen their market position.
 It has 9000 cafes in almost 40
countries.
 Company have strong ethical values
towards customer satisfaction.
Weakness
 Limited product portfolio due to which
management of organization have
limited scope for expansion.
 Due to spending huge amount of money
in different activities, it is facing
problem and are not able to pay
shareholders quarterly dividend
(Proctor, 2014).
Opportunity
 Expand its consumer packaged goods
(CPG) operations. With this strategy,
they will be able to avail various
growth opportunities. This can be done
by creating product portfolio
 Improves its product lines by using
Threats
 Increasing price-conscious consumers is
major threat to business because
organization is providing coffee at high
prices in comparison to their
competitors.
 With the increasing market share they
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Keurig Green Mountain (GMCR)
technique. With the applicability of this
technique, they can enhance their
productivity and efficiency.
are losing market share.
 Commodity Pressures and intense
competition from local
coffeehouses can affect the decisions of
Starbucks (Varey, 2012).
Macro environment:
Porter five forces model Bargaining power of suppliers: Power of the suppliers is low in the marketplace. In
addition, due to size and scope of organization, low threat of competition is present in the
market (Brooks and Simkin, 2012). Bargaining power of buyers: There is huge demand of company’s products in the
marketplace and many buyers are present in the industry (Grinstein, 2008). Besides that,
no switching cost and moderate sensitively of customers toward price are other factors
which can influence the decisions of enterprise. Threats of substitutes: In modern era, many reasonable substitutes of beverages are
available at the affordable price (D'Esopo and Almquist, 2007). They are providing
quality of products to their customers within the stipulated time. They are creating
challenges for Starbucks to retain its current and attract new customers throughout the
world. Threats of new entrants: Rules and regulations framed by government and legislation are
very flexible so that any new entrants can easily enter into market. Besides that, industry
saturation is moderately high and infrastructure setup cost is moderate (Starbucks, 2015).
All these things are providing favorable conditions to new start-up and companies to
open their outlet and deliver products to their customers across the world.
 Rivalry among competitors: Monopolistic competition present at marketplace and no
switching cost are creating high intensity in rivalry. Due to presence of high competitors
pressure is created on firms and it forces the company to perform better and offer
products in affordable price as compared to other competitors (Porter, 2011). However,
on the basis of uniqueness in products and its brand image, Starbucks is able to maintain
its competitive advantage in cut throat competitive market.
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PESTL analysis Political and legal factors: Political environment of UK is favorable for the
organizations and new start-up so that they can easily open their business without any
restrictions. It provides wide opportunity to Starbucks to open its outlets in different
locations of cities (D'Esopo and Almquist, 2007). It also affects the decision of
organization because management of company make strategies by considering regulation
and polices framed by legislation and government of the country. Economic factors: Marketing decisions of the organization can be influenced by global
recession and economic downturn related issues. These kinds of economic problems can
restrict customers to spend their money on luxurious products and it can directly affect
the profit of company (Varey, 2012). Due to bad economic conditions, customers are
unable to afford buying a cup of coffee and further sales of an organization are also
declined. Social and cultural factors: Today’s customers are demanding for quality of products
without compromising with price. It is creating issue for the company for making balance
between both quality and prices of products without sacrificing its quality in products and
services (Knight, 2003). Due to change in demographic profiles of customers; health
consciousness of people has also increased and they have become choosier. Along with
this, presences of variety of products including green & ethical chic products are also
creating challenges for the company to better compete with other core competitors.
 Technology related factors: In order to expand its business in cross nation, enterprise is
concentrating on adopting new emerging technologies through which quality of products
are improved. Training and recruitment programs are introduced by management of
Starbucks for its staff-members in order to understand buying behavior of customers
(Grinstein, 2008). By doing this, staff-members of the company will offer quality of
services to their clients and meet their expectations in a significant manner.
2.2 Segmentation criteria to promote products in different market segments
Starbucks has segregated its market on the basis of demographic, behavioural, geographic
and psycho-graphic which can be described in detail as follow. Demographic factors: In order to meet expectations of young and techno-savvy
customers, IT department of company can create lucrative website and provide all details
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about products and services to encourage visitors to visit website (Tharakan, 2015).
Through developing adequate product portfolio, firm can meet demands of customers on
the basis of age, gender, education and income level criteria in a proper way. Behavioural factors: For the purpose of identifying needs of customers and successfully
running its business throughout the world, it is essential for the company to conduct
market research and understand requirement of people so that quality of products can be
delivered to them within the stipulated time (Brooks and Simkin, 2012). Geographic factors: On the basis of countries, language and region criteria, company can
develop its marketing strategy. In this regard, marketing campaigns and social media
marketing techniques can be helpful for the company to capture wide market segment
and motivate customers to use products of the organization (Kolassa and et.al., 2012).
 Psycho-graphic factors: This strategy can be helpful for the firm by considering interests
and opinions of customers towards products and services provided by Starbucks to them.
Through considering concentrated (niche) marketing technique and effective use of
human and financial resources, management of the organization would be able to
effective segmentation of the customers and meet their needs in a systematic manner
(Dimitrova, 2011).
2.3 Effective use of targeting strategy for a selected product/service
As per the present case scenario, to better understand the targeting strategy used by
company, “India Estates Blend coffee” product offered by Starbucks has been taken. In order to
promote its product, firm can target university and post-graduate students. In this regard, both
traditional and nontraditional marketing mediums can be employed (Martin, 2009). Through
providing this product at affordable price to its target segment, enterprise can create product
brand image on customers' minds as well as promote its products at national and International
level in a significant manner (James, 2012). Firm can also attract professional, managerial and
executive individual by through providing excellent customer services and offer unique drink at
the right price. Along with this, attractive prices and providing discount offers to its customers
are major strategies to cover diverse target market effectively.
2.4 Impact of buying behavior on marketing activities in different situations
Marketing strategies used by company can affect buying behavior of an individual and
can create wide impact on the canvas of minds of the customers. In digital era, most of the
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customers are techno-savvy and they use IT gadgets for online shopping viewing the comments
about products. All these things influence purchasing decision of the buyers (D'Esopo and
Almquist, 2007). Online reviews and electronic word of mouth publicity have created a
significant impact on buying behaviour of customers. Presently, company is facing problem
related to maintaining quality in products and delivering products and services at affordable price
to community. In order to promote its “India Estates Blend coffee” product, firm can use both
traditional and modern media marketing techniques such as peer to -peer sales, social media
marketing and advertisement etc. Strategy can be adopted on the basis of segmentation and
targeting strategy. It can be said that marketing strategies used by enterprise is helpful in term of
promoting its products. It also influence buying decisions of customers and changes perception
of customers towards brand (Kolassa and et.al., 2012).
2.5 Effective use of new positioning strategy to promote products
Starbucks is concentrating towards delivering quality of products to its customers
throughout the world without compromising with quality within stipulated time. Besides that,
enterprise has also replaced its old transaction dealing system in order to create a distinct
impression in consumer’s mind. In addition, by concentring on Supermarkets and hypermarkets
distribution channels, company can be able to promote its products and enhance its profit margin
also (Cohen, 2005). Adoption of new innovative technology and social media advertising
techniques will be beneficial for the firm to expand its product throughout the world (Ceylan,
2008). However, the success of positioning strategy used by company highly depends on
effective utilization of financial, technical and human resource in an appropriate manner. In this
regard, training and recruitment programs can be beneficial for the firm.
3.1 Ways of product development to sustain competitive advantage
In modern era, to meet diverse expectation of customers, Starbucks can consider different
factors such as store location, pricing strategy, advertising or promotion techniques and changing
product line etc. Porter generic comparative model can be beneficial for the organization to
decide and execute sustainable strategy effectively (Brooks and Simkin, 2012). Due to
uniqueness in its products and brand name, customers are willing to pay high price for a single
cup of coffee of Starbucks (Porter, 2011). Differentiation strategy used by company is leading in
cut throat competitive market as compared to other competitors such as Dunkin’ Donuts and
McDonald’s etc. Strategy used by the firm can be understood with help of below figure.
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Figure 1: Competitive strategy
(Source: Varey, 2012)
In order to expand its business in Japan, Taiwan, and Korea market, firm introduces ready-to-
drink coffee beverages and offer it in affordable price to people of those countries.
3.2 Arrangement of distribution channels to increase customer convenience
With the emergence of new technologies, customers are demanding firm to produce
products which are convenient and are easily reachable without any extra efforts. On the basis of
price and customers penetration strategies, enterprise will reduce the gap between producer and
the consumer effectively (Kolassa and et.al., 2012). Besides that, through maintaining its supply
chain and building strong relationship with their customers, Starbucks can ensure that good value
is delivered to their customers. Apart from this, other factors including store design, planning and
proper construction also impact the perception of customers. Through emphasizing on opening
its new stores in high traffic and visibility area and developing warehouse and storage places in
different locations, company will be able to reduce cost and increase efficiency of business
operations (Grinstein, 2008). It will also help in delivering goods and products from one place to
the other place properly.
3.3 Impact of prices on an organization’s objectives and market conditions
Starbucks adopts cost based pricing strategy in order to attract people and promote its
products among wide community. Price is considered as an important factor and it can reflect
organization objective. For example, if company wants to expand its business globally then it is
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essential for the organization to invest money in market research activity to understand
perceptions of customers (Starbucks, 2015). Hence, it can be said that price play a crucial role in
order to attract and retain customers in the firm for long time period. Changes arise in economic
and market conditions, prices of products also changes and it reflect the pricing strategy of
company.
3.4 Integration of promotion strategy to achieve marketing objective
Marketing and advertising strategies used by Starbucks are unique because organization
is using stores as their brand ambassadors. It mainly emphasizes on expanding its outlets very
rapidly all over the world to increase awareness among people (Kolassa and et.al., 2012). On the
basis of effective use of promotional media tools such as Face-book, You-tube etc., enterprise
can create positive image in the mind of customers and motivate them to use products of
company (Proctor, 2014). For example, digital network and Free Wi-Fi services for better
customers experience are also provided Starbucks outlets to promote its brands and even it takes
progressive leaps in cut throat competitive market effectively.
3.5 Additional elements of the extended marketing mix
Table 2: Additional elements of marketing mix
People For understanding needs of people, enterprise
brings regular innovation in products. It
follows 'happy customers start with happy staff'
in business” concept in its business.
Process For quick delivery of products, it has
maintained large supply chain and preserves
relationship with customers (Gilligan and
Wilson, 2009)
Physical evidence Enterprise has opened new stores in all the
prime locations by providing facilities of
quality of car parks and maintaining highly
standardized formats (Porter, 2011).
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TASK 2
4.1 Planning of marketing mixes for two different segments
Table 3: Planning of marketing mixes for two segments
Marketing mix Demographic segment Behavioral segment
Product It introduces energy drinks for
different age groups.
Besides that, main target of
the company are university
and post-graduate students
(Varey, 2012).
Based on the lifestyle of
customers and meeting their
expectation, product is
developed.
Price Cost based pricing strategy is
used and people are ready to
pay high price for it.
Market penetration technique
can be used to develop
products for each class of
people (D'Esopo and
Almquist, 2007).
Place All prime locations of cities Through collaborate with
smart stores and use own
stores to deliver products to
customers on time (Drayton,
2001).
Promotion Unique advertising strategy
and effective use of both
traditional and modern media
marketing tools are beneficial
for company to promote its
products (Proctor, 2014).
Differentiation market strategy
and marketing channels
including brochures,
newspaper, social networking
can be beneficial for the
company to increase
awareness among customers
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4.2 Exploring differences in marketing products and services to businesses rather than consumers
Differences in marketing products and services to businesses rather than consumers are as
follows:
B2B B2C Free Tours By Foot
Company immediately trades
with business firm for better
operations.
Company trades with clients For B2B marketing,
organization has collaborated
its business operations with
United Airlines flights and
own Tazo Tea Company
(Martin, 2009).
For B2C market, they can sale
products and product and
services through there
coffeehouses.
For this marketing below the
line publicity is used.
In B2C, all marketing
strategies are used.
Generally, direct marketing is
used for B2B market and in
shop publicity for B2C
Specific focus on customer. General factors are
considered.
Try to render merchandises
with serious situation in B2B
and for B2C very easy and
contraceptive environment.
Starbucks has used business
to customer marketing (B2C)
strategy to enhance mass
awareness among people
about its products.
Focus is on characteristic of
the merchandises
Focus is on performances of
merchandise
Characteristic of the
merchandises through
demonstration, etc in B2B and
for B2C several benefits with
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contrastive merchandises
(Parrish, 2010.) For B2C,
Starbucks also introduced
cards for promoting its
products and it also provided
direct services to its
customers within the
stipulated time.
4.3 Difference between domestic and international marketing
Table 4: Difference between domestic and international marketing
Factors Domestic marketing International marketing
Operation area Sell products of enterprise
within a local market
Sell its products to consumers
who are present in different
countries
Culture Consider uniform culture Decide on the basis of nations
Scanning of market Both Micro and Macro factors
are considered but mainly
concentrate on Micro factors
(Porter, 2011)
Mainly focus on Macro factors
Risk Less risks associated High risky
Language and labour
barriers
At domestic level, no
language and workforce
availability related issues.
High language barriers and
organization is faced issue in
labors finding (Ceylan, 2008).
CONCLUSION
On the basis of the report, it can be said that Starbucks is emphasizing on developing
innovative products and it is beneficial for the firm to retain its current position. In this regard,
management of company uses segmentation, targeting and positioning strategies. From the result
of SWOT, Porter and Five forces model, it can be interpreted that Technological & Social media
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engagement is very essential for the organization to support international expansion of business.
It is found that marketing principles and strategies used by enterprise highly influences buying
behaviour of an individual and change their product purchasing decisions. Strategies employed
by the firm for different segments will be helpful for enterprise to retain its current position and
better perform against other competitors in this competitive era.
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REFERENCES
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Strategy Series. 8(2). pp.122-131.
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marketing. Journal of Historical Research in Marketing. 3(1). pp.53 – 66.
Gilligan, C. and Wilson, R. M., 2009. Strategic marketing planning. Routledge.
Grinstein, A., 2008. The relationships between market orientation and alternative strategic
orientations: A meta‐analysis. European Journal of Marketing. 42(½). pp.115 – 134.
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Porter, M., 2011. Competitive Advantage of Nations: Creating and Sustaining Superior
Performance. Simon and Schuster.
Proctor, T., 2014. Strategic Marketing: An Introduction. Routledge. pp.135.
Varey, J. R., 2012. Marketing Communication: Principles and Practice. Psychology Press.
Wise, R. and Sirohi, N., 2005. Finding the best marketing mix. Journal of Business Strategy.
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Online
Drayton, J., 2001. Market Segmentation. [pdf]. Available Through:
<http://itu.dk/people/petermeldgaard/B12/lektion%204/Market%20Segementation.pdf>.
[Accessed on 23rd September 2015].
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