- Executive Summary
Starbucks is the largest international coffee House Company that deals with the purchase of coffee beans; process them and sale to its customers. The company has become the choice of many coffee lovers across the world because of its quality coffee it sales. Since its establishment in 1971, Starbucks is the leading in retailing, roasting and branding of exceptional coffee in the world. The company now operates in more than 62 countries, and it has 20891 coffee stores across the world. We offer brewed coffee, snacks, mugs, coffee beans and expresso-based hot drinks to our customers across the world.
Starbucks Coffee Company entirely relies on its customers for it to have enough incentives that will enable it realize its set goals. We also ensure that our employees all over the world are satisfied with the companys terms and conditions and also we make sure as the company that they work in a favorable environment free from any infection or negative distractions. This marketing plan is a way to shape up our performance and do some analysis on various sectors to foster excellent services to our customers. It will also help a big deal to improve and allow the company running and keep in touch with our customers.
The analysis of the strength weaknesses opportunities and threats of the company helped us a great deal in coming up with this strategic analysis, sales promotional strategies and the marketing plan. The company is focusing on plans to expand its premises to meet the customers demands, building royalty with our customers and increased investment on research and technology for the company to come up with new products and services targeting specific customers.
Starbucks Coffee Company has also many challenges it has faced for quit sometime in different countries. Many countries have different economic challenge that confronts it such as political and socio-economic factors. Inflation is very common in many countries as a result of global economic problems that are brought about by persistent increase in commodity prices and political instabilities in advanced economies. Competition has been another challenge that needs a proactive approach as discussed in this plan.
Starbucks Coffee Company also has plans to come up with new and better marketing promotional tools to enable us do exemplary business in the coffee market. Our programs have also focused on investing in research and development in some countries currently not operating.
Starbucks currently it has two mission statements, the first is that when the company started and later they come up with another one. Initially the mission statement states that: To establish Starbucks as a purveyor of the finest coffee in the world while maintaining our un-accomplishing principles as we grow Later Starbuck aIDed to the mission statement which states: to inspire and nature the human spirit- One person, One cup, and One neighborhood at a time.
Starbuck Core Competences
The core competence of Starbucks is to effectively use their main product and ensure differentiation strategies are put in place for high-quality snacks and beverages. Starbucks also believes in giving the finest quality coffee to its customers and have the Starbucks experience through high quality services from its competent and highly experienced staff employees, clean and highly maintained storerooms that enhances culture friendly environment where each and every person can enjoy. Starbucks also has a strong human resource management that cultivates internal and external good relationship with their suppliers. The employees of Starbucks have a good and professional horizontal integration aimed at working together with the focus of achieving the same objective of branding the number one coffee product in the world.
- Production Analysis
Starbucks usually purchases coffee beans from the customer to come and process them as per the market demand or according to the quality the company is planning to focus on. Although it is known that the Company deals only with the coffee it also uses other ingredients to spice up and aID quality to their coffee.
After processing the products, the company designs the brand that can beat the customers sight. The products after production are kept in their stores waiting distribution to the final consumers or the miIDle-level distributors.
- Competitor Analysis
Starbuck has faced stiff competition both from domestic and international markets. Local market is the American market where the company started from the back in 1971 in the Washington DC. Competition is from those companies that produce substitutes of the products that Starbucks produces. The major competitors of Starbuck are the Dunkin donuts, McDonalds and Caribou coffee. These companies dont make public advertisements about their products in the market but instead they look for customers privately through their network of sales persons.
Those who work closer to our stores always face stiff competition from us because we believe that the quality can make us move from one step to the other. Starbucks doesnt conduct its advertisings more than just like any other company. The company has a great number of its customers who are loyal to it, and they help a great deal in attracting other customers because we assure them that a quality is what we believe in
Our competitors usually take their brand names to advertise in a specialty area at the aim of attracting the prestigious class of the customers who are sometimes our customers. They have another very important weakness of weak management structure that has partners who are inexperienced in the selling and advertising industry. We compete with them as experts and guarantee sales employees with their experience they can bring more customers to the company as the quality is guaranteed.
Starbucks has different channels through which it sells its products to reach the final consumers. Now a customer with the Starbuck app can make online order and the products he or she has ordered with will be delivered to their households through our well-networked delivering services. Most of the customers more especially the old or busy officials use these services to reasons such as time, flexibility and convenience.
We want to start outsourcing some of the marketing activities such as where we want to open a new store room. These places usually are unfamiliar to us and therefore require those who are familiar and bring them to our company. This strategy has worked in several countries that we are working in, and now it is used in our new market in India.
- Distribution Analysis
Starbucks wishes to maintain its quality of coffee and further maintain its supply from the actual farmers. The company wants to attain highest levels of expertise and relation with the growers themselves. To keep its actual farmers the company wishes to ensure that it doesnt pass through the miIDle markets who hike the prices resulting to high production costs.
Starbucks utilizes multiple channels to distribute its products across the markets. It means, therefore that it has several ways of distribution: first is to distribute them directly to their customers in the company storerooms. They import the coffee beans and sell them to through their brand names; Starbucks also sells the coffee to the supermarkets and shopping centers because they process more than they require. This distribution enables them to expand too many markets in order to promote their sales.
The country also considers their customers who are not within the area of their operation and come up with exporting their products that will be found in shopping malls and shopping centers. It is meant to ensure the customer relationship and loyalty is articulately maintained.
- Environmental Analysis
With the new technology innovation and invention are common in many industries that have a better future sells. The ever changing internet has brought many prospects in different industries not necessarily the Information and Communication Technology. It possesses a lot of challenges to our markets because our competitors have hired research experts whose mission is to ensure the taste buds of their customers have something sweeter than that of yesterday.
Distributors and marketers are busy looking for ways of selling and distribute their goods and services through the internet. We have already ventured into such a business, but challenge remains as new products are brought to the internet market in a more precise and promising way than expected. Therefore, this asserts us to make more investments in the online marketing so as to reach many customers who are away from us.
Starbucks has intensified its storerooms in the United States and some countries all over the world. In some countries, you find it difficult to operate a business due to their strict macroeconomic issues. Some governments in some economies regulate businesses within their boundaries and in most cases they usually overtax the foreign company owing to their policies. It became difficult, therefore for Starbucks to favorably compete with such companies because already the company incurs a lot of expenses in the market, unlike domestic companies. Some countries have adopted protectionism policies to ensure that their companies continue operating as normal despite economic challenges that flush some economies or the world economy.
- Technological Factors
The present businesses have been digitalized. As a result, customers and seller usually make sales and [purchases online. The other competing companies such as McDonald have adopted a system through which customers do orders and pay online after which they pick goods from a designated place, or the products are delivered to the customer to his doorstep whenever the demand for and pay to such services.
With increased technological pressure from other companies competing with star bucks, the company has decided to come up with Starbuck launched the mobile service portal to enable its customer to do shopping using their mobile phones. The company allied with the Square company to offer that communication services to help issues with the Starbuck cards and easier customer purchase or booking whenever they are away.
- Economic Factors
Economically, Starbucks is always depended on the economic strengths and weakness of the investment countries. It also depends on the global economy since the company is international. Like in the 2008 recession the company recorded a poorest economic development it has never recorded in the previous five years. The company in some cases triggered by politically such as the United States bombing that happened in 2001. There was a contraction in the US economy because the government allocated a lot of resources to fund the fight against terror in the Asian countries. It was also noted that the some American citizens with the Asian origin even feared to do business or walk around since there were intense racial attacks. Starbuck also recorded serious losses as a result of a decline in sales.
iii. Social, cultural Factors
Starbucks currently is not faced with any cultural believes with the consumption of their products. A customer buys the type of goods that suits his or her needs and buys or ignore. Some cultures restrict people to drink and eat traditional meals for preservation of their customs, but they havent caused any trouble yet, we havent incurred that situation yet.
- Political factors
Starbucks is an international company that established many coffee stores all over. Therefore, the company is bound to face different political setups that sometimes make the company flexible to adjust to such political environments. Sometimes, like in Asian countries a political conflict may occur thus paralyzing the businesses of the company. That situation is mostly found in our store situated in developing economies.
- Financial Analysis
This financial analysis is going to focus on six-year period ratio and growth from 2008 to 2013. The company has recorded revenue growth decline to -5.9% during the 2008/09 recession but from then Starbucks recorded a growth of from the financial year 2010 to financial year 2013. In 2012 the company posted an increase in the sales to 13.7% and in financial year 2013 Starbucks also posted revenue of $24.9 billion. It is a translation of a substantial increase in sales from 4.9% to 15% in financial year 20098 and financial year 2012. In financial year 2013, Starbucks recorded a decline in profits as a result of litigation charge of $2.8 billion translating to -2.2% for that year main reason is termination of Kraft Foods agreements. Looking at Starbucks operational efficiency, it has recorded a remarkable asset inventory turnover ratio of 1.51 to 5.4 respectively for the financial year 2013. Interestingly the companys cash conversion cycle have an increase of 54.7 in the financial year 2013. The company boasts a good financial health of debt to equity ratio of 0.29% settles on the current quick financial ratios.
The impressive financial performance of Starbucks is due to increase in growth and sales in emerging markets such as South Africa, Mexico, China and Brazil. The Company has some inroads towards the Chinese market to explore some aIDitional untapped opportunities in that economy. Starbucks is currently tailoring its formats to identify the available markets and know its preferences and tastes to enable the company identifies the right product mix that will suit their needs.
In plans towards realizing a better financial outcomes, the company is in plans to transfer its competent and capabilities all over the world as profit drivers for global expansion way.
Starbucks has a great opportunity growth in tea and fresh juice product mix; these products are building up with coffee to increase the taste of their products away from other countries. It is in a bid to capture and reach the customers shift to like snacks and beverages as a change in lifestyle.
Coffee beans form the most important input to the Starbucks Company. Over the years the prices if coffee beans have been escalating thus creating price volatility risk. This creates a risk of investing in implanting the effective hedging strategy.
Starbucks has been concentrated in the United States markets and now it is looking for opportunities to invest in rural areas where opportunities seem to present it. They are a lot of opportunities in rural areas, and this had been discovered when Starbucks started using its mobile app to do business where many customers requested for delivery of the company products to the interior parts of the rural areas.
Other financial options are being explored to ensure that the company continues to record more financial returns favorable for its future expansionary plans. Starbucks is also in plans of exploring the Asian and Africans markets to explore seemly fertile opportunities. Current according to statistics, there is a growing demand in snacks and that has been characterized majorly in tourists and those who are traveling. Starbucks cannot hesitate in investing in such places where opportunities seem to present themselves.
- Opportunities and Issues Analysis
The company has made tremendous successes moving closer to set objectives. According to many market analyses that have been conducted our products are better placed in the market than any other companies that are competing with us. Therefore, we have laid down programmes for enhancement of our production and embrace a continued value aIDition for our products to gain more customers in the market. So far, we havent encountered any serious weaknesses apart from the last financial years historical sharp decline in sales which translated to decrease in sales
The company explored many opportunities both locally and globally to ensure that we cut on the cost of production that has become todays threat towards making real returns. In a few days to come the company has organized to start accruing raw materials from our neighborhood sources. This decision was made in order to cut on transportation costs remember the cost to transport raw materials has gone up due to increasing in fuel prices. Internationally the company is likely to hire sales experts to explore the market for our product in the internal market the country is partnered with in business.
The most critical issue that the Starbuck Company is facing is the repeat of business. Our businesses dont change or shift to start another business. Therefore, we must have to make sure that our customers get their regular satisfaction and more importantly come up with new products to better the tastes with the focus of increasing the sales.
Our competitors usually exhibit an unfair competition by merging to form mergers so that they can have influential in our sector. Sometimes they give false information concerning our businesses citing that we merged, but many of them are aware of such business tricks in the market. We have foreign customers who sometimes visit the countries where we have store rooms and find it difficult to reach us because of the misleading information that is in the market regarding the mergers. Many believe that we joined a long time ago with other companies but in actual sense we have not merged with any company.
- Starbucks SWOT Analysis
Starbucks gives highest importance on the quality of goods and services they produce to give maximum satisfaction to its customers. No matter the production cost we meet the quality must be assured to maintain customer loyalty to the company. Their product portfolio caters for all age groups and needs of varied demographic factors.
Starbucks has a well-established and competent human resource department that ensure its employees give the quality and excellence services to its customers. Employees of the company are the best asset of the company. Offers training and workshops to equip their employees with the necessary skill required in the industry. Educate workers in this ever changing market mechanism enhances a boost and greater customer services opportunities.
Starbucks promotes goodwill and social responsibilities to its neighbors where they operate any business. In areas where their stores are situated they focus on recycling and reducing the wastes. This is not only done for the neighbors of the Starbucks community but also to adhere to the call of UNEP to keep the environment clean.
To maintain the customer loyalty Starbucks has a reward program and Starbuck card to keep the customers coming to increase their chances of regular visits by its customers. The customers can access their services in mobile outlet; this is to ensure that all customers are reached and do business with the company.
Starbucks has a problem with overdependence on the United States market. The origin of the Starbucks is in America, most of the companys outlets are in America hence the company relies a lot on the economy of the US. If the United States economy records a decline economically it translates to a decline in the overall sales of Starbucks.
Starbucks has a culture of making American/European coffee flavor meaning it meets a lot of market problems when it comes to doing business in other countries. It takes a lot of time for the customer to adapt with the new product in the market that translates to small sales.
Due to the nature of Starbucks to maintain quality products, Starbucks choose to buy very expensive goods to meet such status. Therefore, they become expensive in selling their products and sometimes the customers find their way to other retailers who are selling same products at cheap prices.
Starbucks has a great corporation image which renders it to thorough scrutiny those forces to engage itself in social responsibilities that enhance tight control over labor practices.
Starbucks has an international experience of entering into a new market with its extensive strategies. It has made many markets in many parts of the world where India joined the list recently.it has a large financial base which enables it to expand and explore the market and make investments.
The product mix the company is offering to its customers focuses to satisfy the demands of certain demographic factors. Product mix expansion enhances increased in sales as different customers will meet the products they need in their stores.
Technologically Starbucks has a mobile program that encourages the customer make payments through from their mobile phones. The reward program is simplified; the company partnered with Square communications and introduced the Starbucks app for that matter.
Starbuck does brand extension, and it has branded its image beyond its horizons lines, and it has also ventured into product diversification while keeping the brand dilution risk at check.
There are a lot of competitions from other companies that are producing the same products such as that of Starbucks. These companies price their products lowly as a trick for customer to trade with them. Some of its senior most competitors include the Dunkin Brands, McDonalds, Costa Coffee, and Donut Products, pop, mom and Petes Coffee.
The global coffee market also is another threat because its prices keep on fluctuating thus posing a threat of predicting the future coffee market. It also brings about the problems of pricing the products produced at the present and in the future.
With the changing in the lifestyle of the people, Starbucks also must invest more on research and technology to meet market demands. Competition in the market usually focuses on coming up with new brands with enhanced sales.
During the world economic crisis Starbucks faces many challenges because the advanced and less developed countries were forcing it to be tied on the budget due to economic hardships.
- Product Choices
Starbuck produces a wide variety of goods produced from coffee beans and other raw materials such as tea and strawberry. They produce a variety of products ranging from breakfast snacks, teas and children drinks, coffee drinks and lunch items. The brands under each category are many and therefore the list is very long.
- Marketing Strategy
Starbucks since its beginning in 1971 adopted competitive market mechanisms to enhance it can lead the market for the goods its doing business. The company strives to induce quality in all sectors starting from production, marketing and sales. The marketing sector has been doing exemplarily better in the coffee market. It is the number one coffee finest company in the world. Their investments and market expansion it has created manifests the dominant market strategies it has put across for enhancement of its lead in the market.
Starbucks have ensured that customer satisfaction is their number one strategy.It is through giving customer the quality product they need and give them the best services they require. The managements also focus on the employees who are working there, and they tackle them to training and workshops to aID more skills and expertise to improve on customer services. They also ensure remunerations of that workers sell and accordingly. It will improve the quality of their services thus increase the overall sale of the company.
Starbucks as also used a lot of resources in marketing its brands across the world using different media currently the company has so many websites on the internet that are used to advertise the company products across the globe. It also advertises using local publicity channels such as radios, TVs, and billboards to make the customers aware of the products they offer. Advertisement by a significant margin promotes sales and expands the market for goods and services.
Starbucks has invested a lot in research and extension services, these results to innovation and invention of products in the market. Change creates an expansion in the sales of their products. The customer tastes and preferences taken care of to maintain them all the time. Design of new products also ensures that new products have entered the market, and the customers can access them and if found viable, sales can be made. Starbucks is also aiming at creating an the interconnection between and among its customers and if possible for customers to look for others and introduce them to the market.
- Market Implementation, Evaluation, Ethics, social responsibility and Control
Starbucks has an excellent leadership team that will be able to implement the above recommendations as outlined by company managing board. The company should cater for diversified cultural ties that their people are accustomed to. Starbucks employees are critical to our organization because they provide the company with real sales hence enhanced profits. The company also regards the customers as our family because they are purpose and reason as to why we are doing business. Customer satisfaction should be our core objective to our company. Every member of the Starbucks company our customer tops the priority list.
Starbucks should maintain its ethical and social responsibility in order to foster and exhibit high-level expertise in the industry is doing business. They should at all times concentrate at their core values of ethics and continue with their exemplary lead in the market of snacks and beverages.