Recommendation for Starbucks Coffee Company Essay

INTRODUCTIONThe purpose of this report is to conduct market compendium and recommend appropriate marketing st topical anestheticizegies for Starbucks Coffee.In the report, we will first fashion into Starbuckss goal, its product and markets. Then we will look into the key goions and decisions that control to the success of the party. After that, we will discuss the issues that Starbucks is facing in this agonistic world-wide market. For distributively strategic issue, appropriate marketing recommendations for the company ar made respectively.BACKGROUND AND SITUATION ANALYSISStarbucks Coffee starts in 1971 with a single store in Seattles Pike Place Market. Today, they be privileged to welcome nearly 35 million nodes on a weekly basis, in more than than 12,000 stores well up-nigh the world. (www.starbucks.com)Starbuckss goal is to sprain the preeminent seller and distinguish of burnt umber tree in each of its show markets by selling the finest fictional character burnt umber and related products and by providing each customer a unique Starbucks Experience. Starbucks Experience is a third base place after home and work with superior customer service, innocuous and well maintained sell stores which reflect the personalities of the communities in which they operate. Starbucks scheme for expanding its retail business is to increase its market appoint mainly by source summariseitional stores in existing markets and to give way stores in impertinently markets. In support of this schema, Starbucks opened 1,040 new company operated stores in financial 2006. (www.starbucks.com)During fiscal 2006, Starbucks Coffee Company operated retail stores accounted for 85% of total net revenues. (Starbucks annual Report 2006) In addition to company operated stores, Starbucks works with certain conservatively chosenbusiness to operate licensed stores in various places. Its strategy is to reach customers where they work, travel, shop and dine by tes tifying relation embark with people that sh atomic number 18 the Companys values and commitment to character reference. These relationships take various forms, including licensing arrangements, foodservice accounts and former(a) initiatives related to the Companys business. Licensed and Foodservice stores laughingstock be put up on college campuses. Customers target enjoy their Starbucks in select supermarkets, hotels and military bases passim foodservice venues around the world. During fiscal 2006, specialty revenues accounted for 15% of total net revenues. (Starbucks yearly Report 2006)Starbucks also recently has strategically sold coffee and tea products through other channels such as supermarkets, or non-traditional retail channels such as United Airlines, Marriott International, Holland-American Cruise Line, and Department Stores. market place ANALYSISTo achieving growth and making profits, Starbucks started to go outside(a) since 1996. International connections can bui ld a grueling foreign presence which helps to increase mark off recognition and also increase the domestic business. The more stores Starbucks has around the world, the more loyalty and familiarity can be built among its existing and potential customers.The quest be the macro environmental variables which are likely to impact Starbucks when difference international-_GEOGRAPHICAL FACTORS_Starbucks has carefully analyzed various strategies for the placement of its stores. They provoke highly-developed cost-saving options for these stores to meet the look at to adapt to each geographic region. They also need to consider the perceptivitys and preferences of each area. For example, customers in New Orleans prefer their bagels heat and those in Atlanta require more seating for a neighborly coffee break._DEMOGRAPHICAL FACTORS_Starbucks begin in US, which is the arena we are examining for demographics. As of July 2005, the people of the U.S. was estimated at 295,734,134 (CIA military man Factbook). Population facts are important to Starbucks because they can book Starbucks valuable statistics, such as US population base per Starbucks store. flock ages 15-64 make up the largest percentage of the population (67%), and on that pointfore will have massiveer control of the market than any other sector (CIA World Factbook). This implies that the most important target market for Starbucks are people in spite of appearance this age group. The both(prenominal) largest ethnic groups in the U.S. are white 81.7%, foreboding(a) 12.9% and Asian 4.2%. (CIA World Factbook) The ethnic background is important to a company because it influences tastes, trends, perceptions, values and beliefs of an s constantlyal(prenominal)._ECONOMICAL FACTORS_Estimated GDP in 2004 was $11.75 trillion. GDP real growth rate was 4.4% (CIA World Factbook). The growth rate of GDP suggests that the economy is growing, and therefore there is opportunity for Starbucks to expand business . A very large per capita purchasing federal agency parity of $40,100 suggests that Americans have the opportunity to buy specialty coffee drinks from an expensive, quality-intensive formation such as Starbucks (CIA World Factbook)._3.4 TECHNOLOGICAL FACTORS_Strategic issues that will argufy Starbucks in the future are related to their tight control and lack of flexibility, organizational structure, and diversification. First, Starbucks is vertically integrated as they buy and belt the beans, ship them to the stores, produce, and sell the coffee. They whitethorn face difficulties or have to raise the value of their coffee if the cost of raw beans increases, or there is a simplification in available labor.The second issue is that they are centralized around controlling all steps of the distribution process, entering into joint ventures which may lead to quality control issues in stances.A nonher issue is the efficiency for growth. Starbucks will continue to grow in their p laza business, but the more they spread into international and joint ventures they will face increased quality control problems._3.5 POLITICAL AND LEGAL FACTORS_The Los Angeles city council was considering an ordinance that would require licensing of coffeehouses open past midnight. This demonstrates how government exertion can prove un lucrative for the business. Furthermore, anti-trust laws capacity prevent Starbucks from future expansions, since the company is not owned locally as with other franchisers. Other human-rights activists or organizations can potentially voice their concerns nearly the businesss process, such as how the leaflets concerning under-paid Guatemalan eventually forces Starbucks to establish several codes for treatments of its foreign subcontractors._SOCIAL CULTURAL FACTORS_Nationalism and cultural differences may terminus in recurrent problems on resource availability, product quality consistency and costs, which effect adversely to foreign operations. F or instance, due to its population and potential of growth, china represents a grate opportunity of market. In the past, coffee was considered as a Western bourgeois commodity in China and people are used to have tea instead. Coffee doesnt go well with Chinese food and culture as well. Until recently, the market research shows the sylvans coffee drinking has doubled in the past quaternary historic period. (www.marketwatch.com/ newsworthiness) Nevertheless, it still and amounts to alert one cup per person per annum and the brand typically is instant Nescafe.Starbucks strives to create a unique culture with a passionate interest in changing a simple commodity into an addictive gourmet delicacy and meetindividual market wants and needs without compromising Starbuckss brand image and culture of the company.STRATEGY RECOMMENDATIONSStarbuckss competence in the style of stores and creative coffee drinks has propelled it to the front among coffee retailers. Starbucks is not just s tands for a cup of fresh and nice coffee. Starbucks is almost the passion for the soul of people, quality product, excellent customer service and the bewilder and understanding of the culture of coffee. In the following paragraphs, we are going to outline the 4Ps (i.e. crossroad, Price, Place and Promotion) of Starbucks, followed by appropriate marketing strategic recommendations._PRODUCT_Premium Product StrategyStarbucks has been committed to sourcing the highest quality coffees around the world. It only purchases coffees that have been prominent and processed by suppliers who meet strict environmental, social, economic, and quality standards. Starbucks is well-known for its exceptionally high quality coffees, care in selection, and expertise in roast (www.starbucks.com).Broad Product DifferentiationDepending upon competence and innovation, Starbucks establishes its long lasting and profitable emulous advantages by broadly variousiating its coffee and coffee related products . scrape ImageStarbucks combines its merchandizing strategy with its marketing programs to create and reinforce a distinctive brand image for its coffees. The companys brand image strategy is reflected in its product mix, producing,and sales and educational materials. What Starbucks stands for is a genuine cup of fresh coffee and the recognized brand intercontinental.RecommendationsIt is undeniable that Starbucks has a competitive advantage when it comes to quality, especially when compared to other generic coffee commodity. However, in damage of convenience, despite arduous efforts to establish Starbucks at every corner, there are still more supermarkets than there are Starbucks bars. Realizing the potential for this convenience sector of the coffee market, Starbucks should actively pursuing substitutes that compete in these areas, for example a pre-packaged drinks or offer tea in its shops as a preemptive measure to fight off any teahouse looking to purloin away the coffee dri nkers.Sometime Asia can be mistakenly seen as one culture by outsiders. It can be true somehow, barely to be successful in the region. The countries in Asia are totally different when it comes to culture, value, religion, tastes etc. Many Asians prefer for tea especially in China, a county of devoted tea drinkers who do not take readily to the taste of coffee. Starbucks should set apart different strategies and approaches for each market to make Starbuckss set about to be part of the culture.To meet local tastes or preferences, Starbucks can act local, for example, by introducing alcoholic beverage fro special happy hour set in some countries or region. Traditionally Korea and China are capacious alcohol consuming culture as well as coffee. high gear margin of beer, wine or cocktail may help Strarbucks match local tastes and preferences, most importantly, can boost its revenue._PLACE_Site SelectionStarbucks stores are ordinarily gathered in high-traffic, high visibility locati ons. It takes more than just location to be successful. Attractingcustomers to Starbucks happens by providing high quality coffee and creating inviting, comfortable places that are conveniently located. These places should be those that add to the spirit of each community.Store expanding uponStarbucks expands its stores by entering new markets wherever the opportunity exists to become the leading specialty coffee retailer. By the year 2006, its current location totals 12,440 worldwide (www.starbucks.com)RecommendationFrom past experiences, customer loyalties cannot be stretched or transferred to a new product or channel in a short time. Starbucks should deport a gradually change on its customers purchasing power and habits. Eventually, the lucre may reconfigure how customers think of mass-market brands. But that shift will take years to unfold and company leaders need to manager the transition with great skills. Therefore, Starbucks needs to make some change on its current e-comm erce strategy.First, it may add more value to its value chain by expending its website function as a communication tool to link its stakeholders such as customers, suppliers, management and employees. Second, consolidate the public relation function. Starbucks.com is not only a window for online business, but also a window for construction the companys image and reputation. Third, keep online business on core products but maintain the products diversification as a long-term strategy, and practice it by gradually introducing new products one at a time. Last, to strategic ally with .com companies to expend its selling channels.Starbucks can setup online chat inhabit to facilitate communication among its stakeholders. It may also create free telecommunicate accounts to further spread its fame and consolidate customers loyalty. In addition, it can gradually add indirect coffee related products into its online sales collection, such as coffee machine. It may also want to introduce som e online coffee patch package to provide cheap travel tours or hotel accommodation. In consecrate to increase sales, Starbucks may also ally with .com companies to promote itsproducts. For example, to sign a sell contract with yahoo.com to carry Starbucks products._PROMOTION_Starbucks doesnt have much schematic advertising because it found that there is too much competition for consumers guardianship in TV, radio and print media. Starbucks usually picks one or two charities or events that reach the community it serves. This will inspire people in spite of appearance and outside the company and reinforce the companys value and image.Starbucks integrates its incorporate culture with its surroundings. At all levels of the Company, Starbucks partners strive to be well-behaved neighbors and active contributors in the communities where they live and work. Its part of the Starbucks culture. It is the goal of Starbucks to involve partners as decision-makers, volunteers, and leaders i n the initiatives they support.RecommendationTo be a real orbicular company, Starbucks can participate in or support local events, serving education in developing countries or community activities so that it can enhance its public relationship with those international markets. In most Asian markets, once it is perceived as a true partner or caretaker, its growth strategy might work just as in US market._PRICE_Best value offeringBy pricing its coffee competitively with the prevailing high-end coffee prices, Starbucks represents an attractive combination of price, features, high quality, good service and other attributes customers find attractive.RecommendationThe fact that Starbucks prides itself in customer service, providing the Starbucks experience for the customer, means that the business is mainly customer-oriented, and thus translates to a strong customers power. Nonetheless, the greater the importance of the products quality or services to the customers, as is the case with coffees, there is little conclusion to the buyers price sensitivity. This indicates that as long as Starbucks maintains quality products and superb customer-service, individual consumers are unlikely to be able to exert their buying powers. Therefore, its good for Starbucks to maintain its prevailing high-end coffee prices.CONCLUSIONIt is no dubiety that Starbucks is one of the most successful company in the world. They used a simply strategy, connecting links between treating employees with dignity and respect and producing a good product and services. That was the major factors that differentiate Starbucks from others and bring the successful to Starbucks.The future of Starbucks, which is in a fast-growth phase, is apparently to be successful and promising. However, those keys of success may not be applicable to tomorrows environment and in global market. Defending and growing a competitive position requires firmly built strategies based on its unique, valuable and leading capabi lities and resources, rather than the products and services themselves, proactively responding to ever changing internal and eternal environment to keep fending off its competitors. Although soon there are no formidable competitors for Starbucks leadership in both international and domestic markets, it should not take it for granted for good. Tomorrows destiny of Starbucks should depend on its strategic capability to preserve and pay back its strengths, offset weaknesses, avoid threats and capitalize on opportunities. If Starbucks would correctly identify and propagate with the issues under current and near future circumstances, it could remain excited about further growth and continues to be prosperous.List of Referenceshttp//www.starbucks.com/aboutus/investor.asphttp//geography.about.com/library/cia/blcusa.htm (CIA World Factbook)http//www.marketwatch.com/newsSandhusen, Richard, 1994, Global Marketing, Hauppauge, New York.Cateora, Philip R., 1996, International Marketing, Irwin , Chicago.Peter J. Buckley, Fred Burton and Hafiz Mirza, 1998, The Strategy and organization of international business, Macmillan Press, New York.Masaaki Kotabe, Kristiaan Helsen, 1998, Global marketing management, John Wiley, New York.Bryan Lowes, Christopher Pass and Stuart Sanderson, 1994, Companies and markets, Oxford, UK.Starbucks yearbook Report 2006 (2006). Starbucks Annual Report. Seattle,WA., Starbucks Coffee Company.