Hopkins Starbucks unit 6 marketing plan

1 Starbucks Marketing Plan Keith Hopkins Park University MK351DLU1A2023 Principles of Marketing Henry Roehrich 16 July 2023

2 Table of Contents Executive Summary ............................................................................................................................... 4 Strategic Plan and Focus ........................................................................................................................ 5 Mission .............................................................................................................................................. 5 Vision ................................................................................................................................................. 5 Goals and Objectives ......................................................................................................................... 5 Core competency ............................................................................................................................... 6 Situation Analysis ................................................................................................................................... 6 Company Analysis .............................................................................................................................. 6 Historical Performance and Trends ............................................................................................. 6 Current economic status and target economic status ................................................................. 7 Company Resources .................................................................................................................... 7 Customer Market Analysis ................................................................................................................. 7 Customer Characteristics ............................................................................................................. 7 Demographic and Psychographic Characteristics ........................................................................ 8 Marketing Strategy ...................................................................................................................... 8 Nature of Relationship with Customers ....................................................................................... 9 Competitive Market Analysis ............................................................................................................. 9 Nature of Current/Likely Competitors ......................................................................................... 9 Core Competency Comparison .................................................................................................... 9 External Market Environment .......................................................................................................... 10 Economic Factors ....................................................................................................................... 10 Technological Factors ................................................................................................................ 11 Social Factors ............................................................................................................................. 12 Regulatory Factors ..................................................................................................................... 12 SWOT Analysis ................................................................................................................................. 12 Marketing Strategy .............................................................................................................................. 13 Target Market .................................................................................................................................. 13 Product ............................................................................................................................................ 14 Place ................................................................................................................................................ 14 Promotion ........................................................................................................................................ 14 Price ................................................................................................................................................. 15 Implementation and Control ............................................................................................................... 15

4 Executive Summary This paper provides an overview of the marketing plan for Starbucks. The main objectives are to cover the situation analysis, company analysis, customer market analysis, competitive market analysis, external market environment, SWOT analysis, and marketing strategy. The situation analysis highlights internal and external factors contributing to Starbucks' success. The company analysis outlines Starbucks' objectives, historical performance, and available resources. The latter indicates that adequate financial resources, technological capabilities, and skilled personnel support the implementation of marketing strategies. The customer market analysis describes Starbucks' target market, including its demographic and psychographic characteristics. Also, it encompasses the marketing strategy where the company utilizes a differentiated marketing strategy to meet diverse customer needs and preferences, leveraging its strong brand recognition and customer loyalty. The competitive market analysis examines Starbucks' competitors, including Dunkin', McDonald's, Costa Coffee, Tim Horton's, and local independent coffee shops. The external market environment analysis considers economic, technological, social, and regulatory factors that impact Starbucks' performance. Further, the SWOT analysis identifies Starbucks' strengths, weaknesses, opportunities, and threats. The company's strong brand recognition, customer loyalty, global footprint, and sound financial performance are key strengths. The marketing strategy section discusses Starbucks' target market, product, price, promotion, place, implementation, and control. Keywords: Marketing strategy, competitive, market analysis, brand recognition, SWOT

5 Starbucks Marketing Plan Strategic Plan and Focus This plan explores the suitable means to help stakeholders improve Starbucks’ marketing initiatives and consumer relations. Within the next financial year, the overall plan is to:  Increase consumer retention by 90% by monitoring the influx of return clients.  Within six months, expand the marketing initiatives to reach a broader audience, fulfilling their preferences. Mission To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time. Vision To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow. Goals and Objectives  Consistently deliver exceptional customer experiences  Entering new markets and increasing customer base through opening strategic retail stores in urban and suburban areas.  We continuously innovate our product offerings, introducing new beverages, food items, and merchandise that align with our customer's needs and preferences.  To foster sustainability by committing to environmentally sustainable practices.  The company aims to achieve a healthy investment return through efficient resource allocation, controlling costs, and maximizing sales.  Achieve long-term financial stability through consistent revenue growth, maintaining healthy profit margins, and managing expenses effectively.

7 Current economic status and target economic status According to a report from Statista, in 2022, Starbucks' store chains have steadily grown in the past decade, totaling about 35 711 stores spread across six continents (Statista Research Department, 2023). The store numbers have contributed to its large market share, about 39 percent ( Liu, 2022 ). Consequently, the company is still in a favorable economic position as it continues capturing and defending its market share through continuous expansion of its customer base, driving its revenues. Company Resources The company has adequate financial resources leading to adequate promotion funding, market research, product development, technology infrastructure, and advertising. As a result, suitable approaches are used, and adequate personnel are employed to make these strategies successful. In case of limited resources, the company would seek cost-effective alternatives, leverage partnerships, and prioritize marketing investments is essential. Secondly, the company has efficient technological resources critical for effective marketing, especially today. In cases of limited technological resources, leveraging affordable or free technology solutions, outsourcing marketing technology and analytics expertise, and offering skill development opportunities are essential. Thirdly, our marketing strategies cannot be fully implemented without human resources, as marketing campaigns depend on skilled personnel. In this regard, the company considers cross-functional collaboration, offering training and development opportunities to existing and new employees, and implementing internship programs. Customer Market Analysis Customer Characteristics The Starbucks market primarily consists of consumers from the middle to upper economic segment, both male and female, young and relatively old, aged 22-50. Common

8 characteristics of these customers are 1) their ability to purchase, 2) their willingness to spend on quality coffee and enhanced coffeehouse experience, and 3) their authority to make purchasing decisions, as no approvals or authorizations are needed. Demographic and Psychographic Characteristics Demographics: Starbucks targets everyone across all age groups, mostly from urban and suburban centers in North America, Africa, Asia Pacific, the Middle East, Europe, and China. These customers are relatively affluent, educated, busy, and active. Psychographics: Starbucks targets coffee enthusiasts and is socially conscious with a genuine passion for coffee that appreciates Starbucks's quality and craftsmanship. Also, it targets on-the-Go and Tech-Savvy customers. Marketing Strategy Starbucks utilizes a differentiated marketing strategy, targeting multiple customer segments with tailored offerings and marketing approaches focusing on customer experience. The company ensures its operations meet each customer's diverse needs and preferences. For instance, there is a free Wi-Fi connection in case a customer may need to work or study while they take their coffee. Also, across all global outlets, the company works towards maintaining a consistent look, customer experience, and feel, for instance, by having customized branded coffee cups. This differentiated marketing strategy is advantageous in various ways. For one, it makes capturing and defending its market share possible by appealing to customer segments with specific product variations and customization options. Secondly, it builds on its brand name recognition and equity by delivering personalized experiences.

10 Biggest weakness Central dependence on one product Slow expansion to new markets Unsatisfied employees Low international footprint Low international footprint Second weakness Overpricing compared to others Limited control of its operations Franchise business model Limited product portfolio Sole dependency on coffee sales products Next weakness Intense competition Over-reliance on the US market Negative publicity Infringement lawsuits Relatively higher prices Regardless of Starbucks's stiff competition, its well-established brand recognition, loyal customer base, and extensive store network provide a competitive advantage, making it challenging for new entrants to replicate the same customer trust and loyalty or establish a comparable physical presence. External Market Environment Economic Factors Starbucks' operations are tailored towards protecting the brand image and reputation by focusing on customer experience, which affects its marketing strategies. The coffeehouse collaborates with the best suppliers and distributors to maintain quality. The company's inclusive, diversity and equity culture contributes to its consistent customer experience delivery, reinforcing its marketing strategies. Further, the company has rich financial resources. According to Q.ai (2022), as of 2022, the company reported a revenue of $23.84 billion and a market capitalization of about

11 $104.76 billion, hence a significant market share. The company's future is vibrant. It aims to expand and venture into new markets, increasing revenues and market share. This financial strength allows investment in marketing activities, including advertising campaigns and digital initiatives that enhance brand visibility and market penetration. It is worth noting that the company also operates in a highly competitive landscape facing competition from firmly established coffee houses like Costa and Peet's Coffee ( Chen & Wang, 2023) . Such intense competition influences the company's need to maintain high-quality products and implement pricing strategies, promotional efforts, and product differentiation to maintain a competitive advantage. Further, the economic conditions of a region and its social and cultural factors externally influence the company's marketing strategies. Conditions that reduce customers' disposable income and consumer spending habits impact pricing and promotional strategies. Also, due to the global reach, the company's marketing strategies that require adaptation to regional tastes, values, and customs are influenced by societal trends, cultural norms, and local preferences. Global economic conditions, exchange rates, and international markets also significantly influence Starbucks' performance and consumer behavior. For instance, conditions like economic downturns or recessions may reduce consumer spending on non- essential items, including premium coffee. Additionally, the fluctuations in exchange rates can affect its profitability as weaker local currencies in key markets may increase costs for imported coffee beans, impacting pricing strategies and profit margins. Technological Factors Technological advancements influence Starbucks' marketing strategies, customer experiences, and operational efficiency. Starbucks leverages technology through its mobile app, online ordering, and loyalty program to enhance convenience, personalization, and

13  Customer loyalty leads to return clients.  Global footprint, enabling the firm to access diverse markets.  Strong digital presence to enhance marketing strategies.  Sound financial performance to cushion against potential economic disturbances.  Strong loyalty program to attract and retain consumers.  Major dependence on coffee, making it hugely affected by the disruptions in the supply chain.  Intense competition. OPPORTUNITIES  New markets from the changing consumer preferences.  Partnerships and collaborations.  New products to fit the dynamic market demands.  Price differentiation to cater for broad audience abilities. THREATS  Strong competition in the food and beverage industry.  Economic downturns.  Supply chain disruptions from factors like the COVID-19 pandemic and the Russia-Ukraine conflicts.  Imitation from upcoming brands.

14 Marketing Strategy Target Market Starbucks adopts a differentiated marketing strategy by targeting multiple segments. These target markets include coffee enthusiasts and urban professionals who would enjoy quick breaks at Starbucks walk-ins. These tech-savvy and socially conscious customers would enjoy trendy and innovative products, customization options, and a vibrant store environment. Also, it targets students who value a relaxed atmosphere with Wi-Fi access to enjoy while they study, socialize, or work at the walk-ins. Product The firm competes in the specialty coffee product class, offering several coffee blends, beverages, food items, and merchandise. Besides, Starbucks' current coffee product class is in the maturity stage of the product life cycle. The company has grown significantly since its foundation and has gained a vast market share. It has well-established competitors where there is ongoing competition and innovation to enlarge its customer base and market share. Place The company has several stores with a comfortable and inviting atmosphere. The interior usually has convenient seating arrangements with warm color themes. Most stores also have outdoor seating areas to meet diverse customer preferences. Besides, their settings foster community engagement, with various notice boards where the area residents can post about events, initiatives, or services. Promotion Starbucks has several promotion objectives, including Increasing brand awareness and recognition, Driving customer engagement and loyalty through the Rewards program,

16 Value Chain Coordination Needed Starbucks focuses on efficient value chain coordination, including coordinated just-in- time delivery of coffee beans, efficient inventory management, and effective communication with suppliers, distributors, and retail locations. Transportation Requirements Transportation requirements for Starbucks primarily involve truck and air transportation to move coffee beans, packaged products, and supplies between production facilities, distribution centers, and stores. Inventory/Product Handling Requirements Starbucks manages inventory and product handling to ensure freshness and quality. As coffee is a perishable product, careful inventory management is essential to minimize waste and maintain product availability. Facilities Required To facilitate the distribution of its products, Starbucks requires Production Facilities, which include coffee roasting plants, packaging centers, and food production facilities. Second, it needs distribution Centers that act as hubs for receiving, storing, and dispatching products to retail locations. Thus, this calls for warehousing and logistics operations to manage inventory and coordinate shipments. Third, retail Stores for directly delivering products to consumers. Manufacturing, Financial, and Other Resources Needed Additional manufacturing, financial, and other resources to support the marketing plan will be essential. For example, equipment and machinery may be needed when developing and introducing new products. Secondly, the company may need financial resources to invest in store renovations, technology upgrades, or new store openings. Thirdly, upgrading or implementing inventory management systems and software will be essential to

17 enhance efficiency and accuracy in supply chain operations. Lastly, a proper budget allocation for market research will aid in gathering insights, monitoring consumer trends, and evaluating the effectiveness of marketing campaigns. Timing The marketing plan will encompass a timeframe reflecting the sequencing of activities, defining the order in which marketing activities will be executed, and ensuring a logical flow and proper coordination. Second, it will encompass deadlines and milestones for each activity, allowing for effective tracking and accountability. Third, it will encompass anticipation of changes in marketing activities as the product life cycle progresses. Adjust marketing strategies based on the introduction, growth, maturity, or decline stages. Lastly, it will incorporate seasonal considerations and promotional events to align marketing efforts with consumer behaviors and preferences.

19 https://www.statista.com/statistics/266465/number-of-starbucks-stores-worldwide/ #:~:text=There%20were%2035%2C711%20thousand%20Starbucks,chain%20such %20as%20Siren%20Retail