Recommendation for Starbucks Coffee Company Essay

INTRODUCTIONThe purpose of this report is to conduct market summary and recommend appropriate marketing strategies for Starbucks chocolate.In the report, we will first look into Starbuckss goal, its produce and markets. wherefore we will look into the key actions and decisions that lead to the success of the company. After that, we will discuss the issues that Starbucks is facing in this combative orbicular market. For for for each iodin ace strategic issue, appropriate marketing recommendations for the company ar made respectively. stress AND SITUATION summaryStarbucks C run intoee starts in 1971 with a single store in Seattles information superhighway Place Market. Today, they are privileged to welcome nearly 35 million customers on a hebdomadary basis, in more than than 12,000 stores around the world. (www.starbucks.com)Starbuckss goal is to become the leading retailer and rat of drinking chocolate tree in each of its scratch markets by selling the finest calib er coffee and related products and by providing each customer a unique Starbucks Experience. Starbucks Experience is a third place after berth and work with superior customer service, clean and headspring concured retail stores which reflect the personalities of the communities in which they operate. Starbucks scheme for expanding its retail business is to increase its market deal mainly by opening additional stores in existing markets and to open stores in current markets. In support of this strategy, Starbucks opened 1,040 new company operated stores in fiscal 2006. (www.starbucks.com)During fiscal 2006, Starbucks java Company operated retail stores accounted for 85% of total net revenues. (Starbucks Annual opus 2006) In addition to company operated stores, Starbucks works with certain carefully chosenbusiness to operate certify stores in various places. Its strategy is to reach customers where they work, travel, shop and dine by examineing relationship with people that share the Companys values and commitment to quality. These relationships take various forms, including licensing arrangements, foodservice accounts and other initiatives related to the Companys business. Licensed and Foodservice stores heap be strand on college campuses. Customers can enjoy their Starbucks in select supermarkets, hotels and war machine bases throughout foodservice venues around the world. During fiscal 2006, specialty revenues accounted for 15% of total net revenues. (Starbucks Annual Report 2006)Starbucks to a fault recently has strategic whollyy 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 ANALYSISTo achieving growth and making profits, Starbucks started to go external since 1996. International connections can build a knockout inappropriate presence which helps to increase brand recognition and also increase the domesticated business. The more stores Starbucks has around the world, the more loyalty and familiarity can be built among its existing and potential customers.The following are the macro environmental variables which are likely to impact Starbucks when going international-_GEOGRAPHICAL FACTORS_Starbucks has carefully analyzed various strategies for the placement of its stores. They brace developed cost-saving options for these stores to meet the need to adapt to each geographic region. They also need to consider the tastes and preferences of each area. For example, customers in New Orleans prefer their bagels toasted and those in Atlanta require more place for a social coffee break._DEMOGRAPHICAL FACTORS_Starbucks begin in US, which is the sector we are examining for demographics. As of July 2005, the race of the U.S. was estimated at 295,734,134 (CIA World Factbook). Population facts are important to Starbucks because they can give Starbucks worth(predi cate) statistics, such as US population base per Starbucks store. People ages 15-64 make up the largest percentage of the population (67%), and therefore will fork over greater control of the market than any other sector (CIA World Factbook). This implies that the virtually important target market for Starbucks are people within this age group. The two largest ethnic groups in the U.S. are snow-covered 81.7%, bneediness 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 individual._ECONOMICAL FACTORS_Estimated gross domestic product in 2004 was $11.75 trillion. GDP real growth rate was 4.4% (CIA World Factbook). The growth rate of GDP suggests that the miserliness is growing, and therefore there is opportunity for Starbucks to expand business. A very large per capita buy power resemblance of $40,100 suggests that Americans have the opportunity to buy specialty co ffee drinks from an expensive, quality-intensive organization such as Starbucks (CIA World Factbook)._3.4 expert FACTORS_Strategic issues that will challenge 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 roast the beans, ship them to the stores, produce, and sell the coffee. They may looking difficulties or have to raise the price of their coffee if the cost of raw beans increases, or there is a decrease 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 statuss. other issue is the ability for growth. Starbucks will continue to grow in their core business, but the more they circularise 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 unprofitable for the business. Furthermore, anti-trust laws mightiness 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 near the businesss process, such as how the leaflets concerning down the stairs-paid Guatemalan ultimately forces Starbucks to establish several codes for treatments of its foreign subcontractors._SOCIAL CULTURAL FACTORS_Nationalism and cultural differences may result in repeated problems on resource availability, product quality consistency and costs, which effect adversely to foreign operations. For instance, due to its population and potential of growth, China represents a grate opportunity of market. In the past, coffee was considered a s a westward bourgeois commodity in China and people are used to have tea instead. Coffee doesnt go well with Chinese food and husbandry as well. Until recently, the market research shows the sylvans coffee drinking has doubled in the past four years. (www.marketwatch.com/news) Nevertheless, it still only amounts to about one cup per person per annum and the brand typically is instant Nescafe.Starbucks extends to create a unique subtlety with a passionate interest in changing a simple commodity into an addictive bon vivant 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 in force(p) stands for a cup of fresh and nice coffee. Starbucks is about the passion for the soul of people, quality product, magnificent customer service and the experie nce and understanding of the culture of coffee. In the following paragraphs, we are going to psychoanalysis the 4Ps (i.e. reaping, 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 grown and processed by suppliers who meet strict environmental, social, economic, and quality standards. Starbucks is long-familiar 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 competitive advantages by broadly differentiating its coffee and coffee related products.Brand ImageStarbucks combines its merchandizing strategy with its marketing programs to create and reinforce a distinctive brand image for its coffee s. The companys brand image strategy is reflected in its product mix, producing,and sales and educational materials. What Starbucks stands for is a good cup of fresh coffee and the recognized brand worldwide. testimonialsIt is undeniable that Starbucks has a competitive advantage when it comes to quality, especially when compared to other generic coffee commodity. However, in terms of gadget, 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 volunteer tea in its shops as a preemptive measure to fight off any tea parlour looking to steal away the coffee drinkers.Sometime Asia can be mistakenly seen as one culture by out-of-doorrs. It can be true nearlyhow, yet to be roaring in the region. The countries in Asia are to tally 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 different strategies and approaches for each market to make Starbuckss experience 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 huge alcohol consuming culture as well as coffee. High 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 normally gathered in high-traffic, high profile locations. 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 conveni ently located. These places should be those that add to the spirit of each community.Store ExpansionStarbucks 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 expect a gradually throw on its customers purchasing power and habits. Eventually, the Internet may reconfigure how customers think of mass-market brands. But that shift will take years to augment and company leaders need to manager the transition with great skills. Therefore, Starbucks needs to make some change on its current e-commerce strategy.First, it may add more value to its value chain by expend its website function as a communication tool to link its stakeholders such as customers, suppliers, management and emp loyees. Second, unite the public relation function. Starbucks.com is not only a window for online business, but also a window for building the companys image and reputation. Third, keep online business on core products but find the products diversification as a long-term strategy, and implement 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 room to urge on communication among its stakeholders. It may also create free email 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 some online coffee tour package to provide low-cost travel tours or hotel accommodation. In order to increase sales, Starbucks may also ally with .com companies to promote itsproducts. For example, to hallow a sell contrac t with yahoo.com to carry Starbucks products._PROMOTION_Starbucks doesnt have much conventional advertising because it found that there is too much competition for consumers attention 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 inside and outside the company and reinforce the companys value and image.Starbucks integrates its corporate culture with its surroundings. At all levels of the Company, Starbucks partners strive to be good 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 in the initiatives they support.RecommendationTo be a real global company, Starbucks can participate in or support local events, helping education in developing countries or community activities so that it can enhance its public relationship with those i nternational markets. In most Asian markets, once it is sensed 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 extent to the buyers price sensitivity. This indicates that as long as Starbucks maintains quality products and brilliant 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 doubt 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 capabilities 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 currently there are no formidable competitors for Starbucks leadership i n both international and domestic markets, it should not take it for granted for good. Tomorrows destiny of Starbucks should depend on its strategic competency to preserve and sustain its strengths, offset weaknesses, avoid threats and capitalize on opportunities. If Starbucks would correctly identify and deal with the issues under current and near future circumstances, it could remain excited about further growth and continues to be prosperous. enumerate 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 Annual Report 2006 (2006). Starbucks Annual Report. Seattle,WA., Starbucks Coffee Company.