...water depends on the bottling, packaging, shipping, marketing and retailing costs. On the other hand, although the mentioned costs are nearly the same for the same product, the related price might change significantly according to the parameters such as customer’s perceived value, his/her willing to pay, location, environment, volume etc… For example, as for the stadium example, under the time pressure, the people waiting for the match to start, probably will not have enough time to find a bottle of water with a lower price. This situation will increase the customer’s willing to pay for the same product under this different circumstance. So, the seller could find himself/herself in a more comfort position in terms of higher pricing. As for the cafe case, the pricing strategy will be different from that of the supermarket and street seller. The reason behind this might be depending on the factors such as added value of the cafe environment, customer service, even being visible there or belonging to a member of the audience group etc. The mentioned factors might explain the premium pricing applied especially in touristic or high society places. On the other hand, the service costs such as rent, electricity, wages, tax etc. should be included in the product price somehow in terms of profitability. The pricing for the minibar case is very similar to the stadium example. For example, at a late hour of a regular day, the customer might find it very difficult to go out and find...
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...through outlet expansion, Premiumisation of products to Differentiate and increase prices to influence the average spend per visit; along with NPD and creating new channels to new markets, i.e. PRC. Specialists add value through their expertise and dramatic show of Barista skills. Brand Loyalty is low, with consumers under pressure due to static wages/rising prices. To offset, retailers offer miniatures/vending, improved convenience and create new occasions to visit stores. Fig 2. Porter’s Generic Strategies (1980) – Strategies to increase marketshare (outlet expansion) & loyalty Differentiation * | Premiumisation of products/services to differentiate & charge higher prices - Increasing spend per visit by consumer-driven N.P.D | Focus | A niche market strategy is not suitable; focus is on mass market & intense penetration with diversification of products/services | Cost Leadership | Low prices is not congruent to the Brand Values of Starbuck’s - Premium price for high quality products & customer service/experience | Fig 3. Porter’s 5 Forces - Market Attractiveness – 60% of consumers have not altered coffee habits in recession Competitive Rivalry Mature & Fierce * Branded coffee shops focus on premiumisation & quality of services - Barista expertise to emphasise their ‘added value’ * Independents have flexibility and are as present as Branded * Market dominated by a Large Global companies: Starbucks, Costa, Caffe Nero, Caffe Ritazza and...
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... A. Where do we want to be? 18 B. Segmentation, Targeting and Positioning: 18 1. Segmentation: 18 2. Targeting: 19 3. Positioning: 19 C. Competitive Strategy 20 D. Marketing Mix: 21 1. Product 22 2. Price 22 3. Place: 23 4. Promotion 23 5. People 24 6. Physical Evidence 24 7. Process 25 VI. IMPLEMENTATION: 26 A. Product development and diversification 26 B. Price 27 C. Internationalization and distribution networks: 28 D. Promotion: 28 E. People: 28 F. Budget: 29 VII. CONTROL AND MONITORING: 30 VIII. APPENDIXES 31 EXECUTIVE SUMMARY: Starbucks Corporation, currently the global leader in the coffee business, started off as a coffee bean roaster and retailer in 1971 in Seattle. Since then the firm has established 20,891 stores across 64 countries under the leadership of Howard Schultz. In the last decade, Starbucks has resorted to aggressive expansion making it the leader on the coffee shop market. However, increased domestic competition, recession and rise of commodity prices have led them to shut down 128 stores in 2013. Hence, arises the need for a novel marketing plan. An analysis of the current situation reveals that Starbucks’ biggest strengths are its brand image and store appeal. However, Starbucks’ reliance on the U.S markets for its revenue is highly unsafe in the long run. Hence it is advisable to venture into other markets and thus...
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...A Coffee Story: Starbucks When customers are deciding where they want to buy their hot coffee, many different product attributes will be factored when making their decision. Product attributes may include different price points depending on the size of the hot coffee, and the quality of the coffee. The functionality of the hot coffee store with having a fast service is one attribute customers seek because many customers are buying on their way to work. Customers are looking for a combination of attributes to create a great value for the price. A recent study suggests that consumers purchasing decisions are made based on the perception of product value rather than price. “There is a price-value formula consumers use to calculate brand differences and to decide which brands to buy. Shopper consciousness has shifted from just trying to ferret out deals to looking for brands that provide value”. (Agriculture and Agri-foods Canada, 2010) The study also suggests that with created value, consumers will likely remain loyal to those hot coffee stores. For many hot coffee drinkers it is the quality of the hot coffee that they are looking for when making a purchasing decision. Customers are looking to the hot coffee chain that has their favorite blends or flavors to choose from. Innovations in the hot coffee market have created new customers to the market who wouldn’t normally consider coffee as their beverage of choice. “Products such as iced coffees have captured the interest...
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...describe segmentation by categorizing the products or services for that segment. Segmentation is “the process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics. Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment.” Segmentation try to find out what kinds of different consumers with different needs exist. Segmentation depend on? Gender Age Social class Personal Disposable Income Family life cycle Employment status Marital status / living arrangements and many more. Segmenting consumer markets - Geographic -Demographic -Psychographic -Behavioural There are different kinds of variable which are used for segmentation: -Demographic – to this belong: gender, income, education, location, and family size, ethnic. -Behaviour – some customers are “brand loyal”- customers stay with the brand they are stick to. Some consumers are “heavy” users while other are “light” users. Targeting evaluate the attractiveness of each segment. Defending a target market requires market segmentation, “the process of pulling apart the entire market as a whole and separating it into manageable, disparate units based on demographics”. To the target marketing belongs to break a market into segments. Target marketing makes the promotion, pricing and distribution of the products or services. Target marketing provides...
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...saturation of the United States market, Starbucks, an international coffee house chain, started to expand its business overseas. Starbucks first tested the Japanese market by establishing joint ventures with local retailers. By 2001, Starbucks had more than 150 stores and plans to continue its success at a brisk pace. The company began by entering into joint ventures with local businessmen that allowed Starbucks to retain control and have the benefits of a local operating partner, Starbucks was able to embark on an aggressive expansion campaign, and successfully opened in foreign markets by 2001. This plan made the opening of over 600 stores located out of the United States possible. The decision to expand internationally gave Starbucks the ability to reach a larger market and meet its stated growth goals. More than 200 units in other countries, including China, Japan, Kuwait, Lebanon, New Zealand, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand. http://www.fundinguniverse.com/company-histories/Starbucks-Corporation-Company-History.html * An outline explanation of the chosen international organization Starbucks Mission Statement To inspire and nurture the human spirit– one person, one cup and one neighborhood at a time Product Strategy Psychographics Changes in the social and economic structure of the country are resulting in higher levels of disposable income and a greater interest in Starbuck products and merchandise. At the same time, other...
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...2 Four P’s Marketing Mix on Starbucks The marketing mix plays an important part in marketing. The purposes of the marketing mix are to use a combination of tools to satisfied the customers and obtain company goals. The marketing mix is referred as the four P’s: product, price, place, and promotion. “The elements are adjusted until a right combination is found that serves the needs of the product’s customers while generating optimum income”. (Marketing Mix, 2010, p. 1). By using the four P’s, most businesses have the ability to connect with consumers within the targeted market. The ability to create a successful marketing mix often has good results. However using the wrong mix can lead to failed marketing strategies which can result in the business dissolving. The key is not to get stuck on one mix; the combination of elements often has better results than just using one. This research paper will review all elements of the marketing mix and how each ones plays an important role that organizations must acknowledge in order to be successful. The first P in the mix is the product. The product is used to determine market needs, wants, and desires, to assess internal resources regarding satisfying market needs, wants, and desires with innovation, to develop process for market resource and product testing, and to forecast product life cycle. With this being said, the product would refer to a physical product or service in a company. The product would be used to satisfy a targeted...
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...focused on Starbucks’ supply chain. Starbucks’ business model and supply chain strategy will be reviewed. Also, the global supply chain challenges the company faces will be analyzed. Further, the importance of aggregate planning and demand forecasting to Starbucks’ supply chain will be discussed. Finally, ways in which Starbucks utilizes pricing promotions to influence demand will be highlighted. Starbucks’ Business Model & Supply Chain Strategy Starbucks is a global coffee chain with over 21,000 outlets in 60 countries. The company is built on its brand which demands an experience and service above all other coffee chains. Until recently, Starbucks retained full ownership and control of its outlets. Franchising is relatively new transition for the organization. Yet, Starbucks takes a different approach to franchising than other large organizations like Dominos or Subway. Starbucks is extremely selective about who they franchise to. They take steps to ensure everyone they partner with will operate in sync with Starbucks’ culture and brand emphasis, as well as align with their environmental sustainability commitment. (Curtis, 2015) The fact that Starbucks was able to grow into a global organization with over 21,000 outlets speaks to the strength of their supply chain. Their supply chain strategy is built on a make to stock model which focuses on utilizing real time demand to efficiently meet the requirements of several different distribution channels. Starbucks...
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...Marketing Mix: Starbucks MKT/421 Marketing Mix: Starbucks When thinking about the companies that have had the most successful marketing strategies, Starbucks is one of the top companies. Starbucks is an international coffeehouse beverage chain that has become very successful. Their marketing strategies have allowed it to surpass other coffee offering outlets such as Peet’s Coffee and Dunkin’ Donuts. Starbucks has been able to capitalize on consumers wanting a quality coffee or tea beverage delivered at a reasonable price point. One of the key factors in their marketing strategy has been to cater to areas where consumers have a disposable income and a “want” for their products (“Starbucks Marketing”, 2013). Additionally, as revenues skyrocketed, Starbucks began offering their product at retail outlets. This enables any consumer to experience their product without even having to visit a local Starbucks coffee shop. This has proven to be a very successful venture for the company. Fiscal year 2011, boosted over 11 billion dollars in revenue for the coffee giant. None of this would have been possible without a successful marketing mix (“Starbucks”, 2012). Marketing mix The actual term marketing mix was first used back in 1940’s, but gained momentum in 1964. That year, Neil H. Borden published an article entitled The Concept of Marketing Mix that detailed the actual concepts of a marketing mix strategy. His initial idea contained around thirteen different...
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...Decisions: Starbucks Starbucks has wide range of business activity. These activities allow the company to use numerous channels of product distribution. With the company operating in many locations worldwide environmental factors play a major role in marketing decisions. Each distribution channel is affected differently and the company's flexibility in the marketing plan allows the company to adjust their strategies to meet the needs of the environmental factors. Starbucks is known as the premier company of the finest coffee in the world. They purchase and roast high quality whole bean coffee, sells them with fresh, rich-brewed Italian style espresso beverages, pastries, confections and coffee-related accessories and equipment. Starbucks provides a work environment treating others with respect and dignity. The company embraces diversity as an essential component in the way Starbucks does business. Starbucks also applies the highest standards of excellence to the purchasing, roasting and fresh delivery of their coffee. Starbucks believes that the company should enthusiastically satisfied customers all the time and contribute positively to our communities and our environment and recognize that profitability is essential to our future success (Starbucks.com, 2008). Starbucks owns and operates its own facilities, warehouses, and retail stores giving the company control of product design, shipping, and receiving. The company's strategy is to sell premium products pricing the product...
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...The strategic capabilities involves to what extent Starbucks is able to use it resources and competences wisely and which capabilities are creating a competitive advantage. First, a model is made to select the resources from the competences and the unique resources and threshold resources. From these the core competences can be created and implemented in the VRIN-model. Resources Competences Treshold capabilities Treshold resources ● Financial resources ● Suppliers ● Stores ● Equipment ● Staff ● Worldwide stores in more than 60 countries Treshold competences ● Always say yes to the customer ● Personal service Capabilities for competitive advantages Unique resources Tangible ● Coffee ● Located world wide ● Technological resources ( Starbucks app) Intangible ● Brand/Trademark ● Atmosphere ● Word to mouth(online) ● Schooling program ● Loyalty program Core competencies ● Most recognized brand in the coffeehouse industry ● Exceptional customer services achieved through employee motivation ● Focus on high product quality ● Customer loyalty ● High CSR image Table *.* Resources, capabilities and competences of Starbucks With the table above, the core competences can be put in the VRIN-model to see if they have a competitive advantage. Resources and capabilities of Starbucks Is it valuable? Is it rare? Is it hard/costly to imitate? Is it non-substitutable? Competitive implication Located World Wide ( stores in 60 countries)...
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...on Integrated Marketing Starbucks Coffee Starbucks History Jerry Baldwin, Zev Siegl and Gordon Bowker created Starbucks; they met coffee roasting entrepreneur Alfred Peet who inspired the three novices to open a coffee shop to sell roasted coffee at their first location in Pike Place, Seattle. Their goal was to sell high quality coffee beans. This venture has certainly paid off, as Starbucks has become a well-known name brand both locally and internationally. They met Howard Schultz an entrepreneur who suggested the idea of selling coffee drinks in European style cafes. He later went on to purchase Starbucks and expanded the coffee chain. Starbucks Corporation (NASDAQ: SBUX) is a global coffee company with an Italian-style coffeehouse which started its chain in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 19,972 stores in 60 countries, including 12,937 in the United States, 1,273 in Canada, 971 in Japan, 790 in Great Britain, 657 in China, 453 in South Korea, 356 in Mexico and 276 in Taiwan. Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, coffee beans, salads, hot and cold sandwiches and Panini, sweet pastries, snacks, and items such as mugs and tumblers. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee...
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...been trending down since 1960’s. So Starbucks was extremely cautious in selecting its target markets. A target market, according to Kotler and Armstrong (2004), consists of a set of buyers who share common needs or characteristics that the company decides to serve. The decision of selecting target segments can be assessed by looking at market factors, competitive factors, and political, social, and environmental factors (Jobber, 1995). Price, bargaining power of customers and suppliers and barriers to entry all comes under the market factors, and in the case of Starbucks, their coffee was expensive and they were trying to re-create a new coffee culture in America. Hence, they have low barriers for entry. Since they were extremely careful in each step of coffee making, they tried to maintain a long-standing relationship with their suppliers (Stanley, 2002) and similarly they did not have any real competition threats. Starbucks targeted office workers, with middle to high incomes, who had a desire to purchase premium products. Schultz wanted Starbucks to become the ‘Third Place’, the place between home and work where people could gather, relax and interact with one another. So they were vigilant about their quality control to meet the high expectations. Also they paid a great deal of attention to the details of the store everything from the layout, to the furniture, to the music. Moreover, they were in the ‘introduction’ stage in the product lifecycle. Another approach to the market...
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...(Whitbread Annual Reports, 2011-2015) Graph 1.1 (Whitbread Annual Reports, 2011-2015) Competitive Environment UK coffee shop market will exceed 30,000 outlets and £15 billion turnover by 2025, driven by branded coffee chain expansion and non-specialist operator growth. Current market is valued at £7.9 billion (Allegra World Coffee Portal, 2015). Harris + Hoole has been ranked number one for coffee quality. Other players like Starbucks and Caffe’ Nero, food service chains like McDonalds, Subway, Pret a Manger and Paul all compete for the market share. Costa’s customers are mainly mature adults, students and professionals segmented to upper middle and the privileged class. The key challenges will be to retain the leading market share by changing the unique selling proposition of Costa. (Euromonitor International, June 2015) 2. Costa Coffee: Resources and Capabilities Table 2.1 Strategic Importance Costa’s Relative Strength Resources • Skilled manpower • Menu range to cater for day part sales and changing trends • New products • Stores that provide customer experience • Healthy cash profits to fuel growth and refurbishment of stores • Brand Name and Awareness • Strong training,...
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...INTRODUCTION 1. Starbuck is a coffee Shop and a largest coffee shop in the worlds based in Seattle, Washington, USA. Starbucks starts in Seattle in 1971. Three friends, Jerry Baldwin, Zev Siegl, and Gordon Bowker, who all had a passion for fresh coffee, opened a small shop and began selling fresh-roasted, gourmet coffee beans and brewing and roasting accessories. Starbucks is the leading specialty coffee retailer in the nation, with over 5,000 locations in 22 international markets. The Starbucks ensuring the extraordinary potential of coffee is discovered , revealed and delivered- helping to bring great pleasure to millions of people each day. 2. Old Town White Coffee, founded in 1999, made history when the company became the first, the pioneer white coffee producer to manufacture and launch the famous Malaysia Ipoh White coffee as a 3in1 instant Blend. Old town White Coffee 3in1 classic together with the original recipe from 1958 spearheaded a breakthrough in the coffee industry. The company single-handedly captured the original authentic taste of an otherwise localized white coffee, turning in into a mobile commodity a fast moving consumer good (FMCG), capturing the South East Asia market. 1. STARBUCK 2.1 LOGO, VISION & MISSION [pic] Starbucks logo designed by Terry Heckler of Heckler Associates .New Starbucks logo will be displayed on the product starting in March, predominantly...
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