Achieving corporate success

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Table of contents

Page no

Part A

Starbucks company overview 3

Taxation policy 3

Future prospects 4

External audit 4

Brand image of Starbucks 5

Part B

Market segmentation 6

Part C

PEST analysis 7

Joint-venture of Starbucks with Tata 8

Part D

7p’s of Marketing mix 9

Reference 11

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To: Starbucks

From: Retail marketing consultant

Subject: The Brand management of Starbucks

Date: 26.07.2013

Part A

Starbucks company overview:

Starbucks is the leading brand name in global coffee market. The company was

established during the year 1917 in USA. The company has made significant

contribution towards the growth and expansion of international coffee chain. At

present in competitive coffee market as a part of its marketing policy Starbucks takes

into account the market segments along with the buying behavoiur of the existing

and potential customers based on the global trends. The company is headquartered

in Seattle, Washington, USA. At present the company has expanded its market

through 17,000 outlets in 49 countries. Starbucks has initiated significant strategy

policies which has enhanced the company to expand its business in an international

context(Starbucks,2013).

Taxation policy:

During the expansion and growth of coffee market it is observed that there is high

taxation imposed on the farmers producing coffee beans. In this stage it is observed

that Starbucks is paying higher price for the coffee due to the taxation policy. It

results in the pricing policy of Starbucks. Therefore it is important for the

management to consider the macro environment and policies which has significant

influence during the international trade.

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Future prospects:

The future prospects of Starbucks reflects better control over the operational cost

well as diversify the portfolio of the business. At present due to the financial

downturn it is observed that the expansion policies of Starbucks is quite slow. The

company is adopting cost-cutting policy to enquiries the profitability in the short run.

According to the researchers it is observed that the company is rethinking its for in

the market entry strategy for the near future due to its pricing policies. In addition to

there are external risk that results in from the volatile political and business issues

during the foreign market expansion. Therefore finally it can be observed that the

company's future plan is to operate the business in a cost-effective manner that will

enhance the company to serve the customers low cost coffee drink income present

with the other competitors.

External audit:

The external audit plays a significant role for Starbucks to focus upon the current

market position as well as the future expansion policies. In addition to make the

marketing plan successful during the global expansion it is important for Starbucks to

focus upon the current economic climate in which the business will take place. The

external audit for Starbucks can be conducted by following the concept of porters

Diamond model(Bogomolova,et al,2006).

Porter’s Diamond model: porters Diamond model reflects for prime stages through

which the business can be operated in local and global scale during the expansion

stage.

Factor condition: in order to compete with the competitors and to strengthen in the

competitive policy in the market it is essential for Starbucks to focus upon the human

resource management as will as the available resources required to make the

products available for sale towards the customers.

Demand conditions: In this stage it is observed that Starbucks needs to provide

emphasis more on its local outlets rather than theforeign in market. It will ennoble the

company to make its current market position more stable and competitive if the

product has larger and more demanding market at home country.

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FIrms strategy, structure and rivalry: In order to focus upon the competitiveness of

Starbucks it is important to take into account the management structure operational

activities and the overall system based on the country of operation. In addition to the

foreign market expansion the country needs to be more productive in order to enter

and expand the foreign market.

Brand image of Starbucks:

The prime objective of Starbucks is to develop positive relationship with the

customers/customer relationship management. It enhances the company to establish

a reported brand image. The brand image with enhanced the company to create

more customers through the positive word of mouth of the existing customers.

Starbucks is continuously striving to improve its service quality that has a number of

the company to gain the leading position in the coffee industries in local and global

context. In context of Starbucks branding office important advantageous that

includes legal protection of the product composition and the related features in order

to avoid the risk of copying. Moreover branding also enhances the wireless keypad

tones of the products of Starbucks that enables the company to maximise the profit.

In addition to create unique identity in the marketplace branding is the process of

attracting new customers. It also enhances Starbucks to manage its inventory in an

efficient manner to balance between the demand and supply. Finally during the

market segmentation process branding focuses upon the overall process by taking

into account the distinctive product offerings designed to satisfy the specific needs of

individual customers.

In context of the customers brand image offers with the reassurance of quality

products in which the customer can depend on. In addition to the perception of

beliefs of the customers are strongly influenced by the brand image of Starbucks as

it focuses upon the consistency of the product. In order to identify the product

branding enhances the customer to establish positive relationship with Starbucks.

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Part B

Market segmentation:

According to Kotler(2006 )the market segmentation is considered to be an important

strategy tool for Starbucks towards the growth and expansion of the business

leading towards profit maximisation. It also enhances the company to target and

identify the customers with their specific needs. In order to add just the marketing

mix perfectly and to allocate the resources in an efficient manner it is essential to

focus upon the market segmentation. In addition to several the products in

comparison with the other competitors in a competitive rate Starbucks has

developed it combines strategy to break down their own market. The Starbucks

coffee company mainly uses demographic and psycho-graphic segmentation during

the market expansion. The target group of customers of Starbucks are mainly really

educated men and woman with children in the age group of 40. In order to deal with

the ideal segment of Starbucks the coffee houses creates a mature and highly

prestigious brand image which offers forts and beverages to the target group of

customers based on the market segment. According to the statistical review and the

market analysis it is observed that the main segment represents Mormon in the age

of 18 to 35, 33 %of them are college graduates, 42% of them have children, and

54% of them are married (Kolk,2005).

On the other hand while considering the phycho graphical canisters take it is

observed that prime customers of Starbucks on the college graduates with high

income who are interested in sharing in neighbourhood and to socialise themselves.

In order to reach everyone in the community it is essential for Starbucks to relocate

in retail stores in central sports of neighbourhood which can be the train stations and

the busy shopping centres. In addition to Starbucks also focuses upon gourmet

coffee drinker as one of its important market segment.

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Part C

PEST analysis:

Political:

Government stability: During the market expansion policy Starbucks should take

into account the political stability in context of foreign market entry mode in general.

In addition to the changes in taxation and legislation policy has significant impact on

towards the market expansion and growth of Starbucks.

International stability: The international economy has significant contribution towards

the sales and market expansion of Starbucks. During the period of recession it is

observed that the market expansion of Starbucks will be comparatively slow.

Employment law: it is important for Starbucks to focus upon the employment laws

and regulations in order to create a better working environment for the workforce. In

addition to the reduction in licensing and by meet cost will make possible for the

farmers to reduce the production cost of coffee beans in context of Starbucks.

Economic:

The interest rates is considered to be one of the significant determinant of towards

the market expansion and growth of Starbucks. The interest rate has significant

influence towards the customers buying behaviour and disposable income to spend

on luxury products and drinks.

Competitors pricing policy: The competitors pricing policies has significant impact

towards the increase in Starbucks market share.

Exchange rates: The exchange rate and its fluctuation has significant influence

during the international market expansion of Starbucks. Therefore it is essential for

the company to take into account the inflation rates towards the profit maximisation

and to expand the market in global context.

Social:

Demographics: it is important for Starbucks to focus upon the demographic

characteristics of the target group of customers. It will enhance the company to 7

identify the customer range and to take the necessary marketing initiative for their

products. At present the customer range of Starbucks are mostly that youngsters

between the age group of 18 to 24. Therefore Starbucks needs to focus upon the

customers based on their demographic statistics.

Employment opportunity: Starbucks is a leading brand name of coffee in local and

global context. The company should initiate significant employment policies that may

contribute towards the social responsibilities(Kolk,2005).

Location: during the establishment of outlets it is essential for Starbucks to consider

the customer group their easy access towards the coffee shop. In most of the cases

Starbucks aim to establish its outlets near the busy shopping malls.

Technology:

At present the advancement of information technology has made possible for the

company to create new customer and to retain the existing customers by serving

them with the required blended coffee (Bogomolova,et al,2006). In this stage it is

also mentioned that social media, Facebook and Twitter and the modern contribution

of information technology that has ennoble Starbucks to establish favourable

relationship and to keep close with its potential and existing customers.

Joint-venture of Starbucks with Tata:

At present as a part of four in market entry mode in a India Starbucks has

established joint-venture meet Tata coffee and established Tata Starbucks limited

during the year 2012. Tata global beverage is one of the second-largest the

company in India. Tata coffee is the subsidy of that the global beverage. It has one

of the largest coffee plantation company and the second largest exporter of instant

coffee in context of India. The prime product range of the joint-venture company will

be featured on espresso that is sourced and roasted locally from India through the

coffee sourcing and roasting agreement with that the coffee limited. In addition to the

espresso sourced from India will be a hallmark feature of all Starbucks stores in the

market. It will highlight the quality espresso available in India. Therefore the prime

objective of the joint-venture is to expand the market of Starbucks in India by

creating a reported brand image and customer loyalty.

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Part D

7p’s of Marketing mix:

Product: Starbucks coffee company has its own traditional brand name an taste in

context of its quality coffee products. The company offers large range of products for

its existing and potential customer group in a reasonable price. The company is

striving for excellence in order to create competitive market and to remain in the

leading position in the coffee market of UK. At present besides its normal product

ranges the company is also aiming to diversify its portfolio in fast food sector.

Price: the pricing policy is considered to be an important determinant of marketing

mix. In order to identifying the buying behaviour and the buying capacity of the

customers during the market expansion of growth it is essential to focus upon the

rise. At present the company's target group of customers aren't the age range

between 18 to 24 years. Therefore to attract the age group of customers and to

focus upon the buying capacity it is significant for Starbucks to offer quality coffee in

a reasonable price. During the customer survey revealed in statistical data analysis

papers is that most of the customers of style works us that youngsters with limited

budget for the cup of coffee. Therefore the company may still take into account the

cost-effective strategy for the existing and potential customer group (Bremner, 2005).

Promotions: At present the UK coffee market is competitive. In this stage to remain

in the leading position and to compete with the other key market players such as the

Costa coffee, Caffe Nero and Eat it is important to focus upon the promotional

campaign of its product range. The social media, Facebook and Twitter are the

modern contribution of information technology that enhances the company to bridge

the gap between the potential and existing customers in order to promote the

product range of Starbucks.

People: training and development process are the prime concept to get the best

possible outcome from the people in Starbucks. In addition to the motivation policy

initiated by Starbucks creates better working environment for the people in the

workplace. It results in better service quality and customer satisfaction in Starbucks

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Process : process is one of the significant determinants of marketing mix. It enables

the company to focus upon the overall marketing process towards the expansion and

growth of Starbucks in competitive of industries.

Physical evidence: the physical evidence of Starbucks is based on its reported brand

image. In addition to the court overtakes and the presentation policies of the

company's products towards the existing and potential customer group are

considered to be the significant determinants of the physical evidence that enhances

the company to remain competitive in the coffee market.

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Reference

Bogomolova, S., Romaniuk, J. & Sharp, A. (2009) Quantifying the extent of temporal

decayin service quality ratings. International Journal of Market Research, 51, 1, pp.

71–91.

Bremner C., (2005), Coffee Shops in the UK, [online], Euromonitor International,

Available from : < http://www.euromonitor.com/Coffee_Shops_in_the_UK>

[Accessed 25th July, 2013]

Kolk A., (2005) “Corporate Social Responsibility in the Coffee Sector: The Dynamics

of MNC Responses and Code Development” European Management Journal, 23:2.

Kotler P. and Keller K.L., (2006) Marketing Management, 12th Edition, Upper Saddle River, NJ : Pearson Prentice Hall.

Lee and Gómez1 (2011), “Impacts of the End of the Coffee Export Quota System on

International-to-Retail Price Transmission”, Working Paper, Dyson School of Applied

Economics and Management Cornell University, Ithaca, New York, USA

Starbucks(2013),Available at :http://starbucks.co.uk/[Accessed 23th July, 2013]

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