Marketing Essays - Starbucks Coffee

Starbucks Coffee

Starbucks Caffeine company is headquartered in Seattle, Washington. It started in 1971 with just one single retail store at Seattle's historic Pike Place Market. Now it is just about the leading brand and merchant in the world. Starbucks went general public on June 26, 1992.

The main aim of Starbucks is to be the main brand and retailer of finest caffeine in each of its concentrate on market segments nationally and internationally by providing the best quality espresso and related products, and by providing high class customer service. Starbucks buys and roasts a superior quality total bean coffees to sell them with fresh, rich-brewed espresso beverages, different types of pastries and caffeine related accessories and accessories (www. starbucks. com). Furthermore Starbucks also provides coffee and tea products strategically through other programs such as supermarkets and non traditional retail programs such as United Airlines, Marriott International, Barnes & Noble bookstores and Shops.

More than quality coffee, Starbucks includes a variety of hand-crafted drinks, pastries and in some markets, a selection of sandwiches and salads. Starbucks goods includes exclusive espresso machines and caffeine brewers, unique confections and other items related to caffeine and tea. A number of the Starbucks products are as follows;

Beverages: Brewed coffees, Italian-style espresso, frosty blended beverages, roasted whole bean coffees, tea products, juice, sodas, and coffee liqueur.

Food: Sandwich, Salads, pastries and snow creams

Non food items: Mugs, Travel tumblers, coffeemakers, caffeine grinders, storage containers, compact discs, video games, seasonal novelty items, Starbucks credit card, media pub.

Starbucks's main quest is usually to be a worldwide company. In order to achieve this it requires, the development strategy that Starbucks applied to conform with variety market and local need are: joint endeavors, licenses and company had operation.

The final number of Starbucks stores are 15, 011 that are handled and 3, 891 are licensed procedure in US that happen to be disseminate in 50 says. For the international location, Starbucks' store are available in 44 countries outside of the United States and 1, 049 stores are company owned managed in Australia, Canada, China, Germany, Singapore, Thailand and the U. K. and 6, 506 are joint ventures and licensed operation.

Internationally Starbucks exposed their stores in the next countries;

  • Starbucks open in Tokyo, Japan. Nowadays, there are more than 700 retails retailers in Japan. Furthermore, Starbucks also available in Hawaii and Singapore.
  • Starbucks open up in Philippines
  • Starbucks wide open in U. K. , Taiwan, Thailand, New Zealand and Malaysia.
  • Starbucks open up in Beijing, Kuwait, South Korea and Lebanon.
  • Starbucks wide open in United Arab Emirates, Shanghai, Australia, Qatar, Saudi Arabia and Bahrain.
  • Starbucks available in Switzerland and Austria.
  • Starbucks available in Oman, Germany, Spain, Mexico, Puerto Rico, Southern China, Macao and Shenzhen, Greece and Indonesia.
  • Starbucks available in Turkey, Peru, Chile and Cyprus.
  • Expansion to France
  • The latest expansion in Jordan

5 P's for Starbucks Caffeine Company

Starbucks is not simply a good glass of fresh espresso, but a better quality product, excellent customer service and better understanding of coffee culture. Starbucks has so far achieved unpredictable accomplishments in coffee string industry. Now we will feel the strategies of 5 P's, price, product, place, promotion and folks.

Price:

The Starbucks prices continually matches using its competitors competitively signifies Starbucks a nice-looking blend of features, high quality, excellent service and other attractive features.

Product:

Starbucks is well known very well in the market due to its high quality espresso, treatment in selection and know-how in roast. It buying coffees which have been grown and refined which meets tight environmental, economical, interpersonal and quality benchmarks, which would work & befitting the market and the customers.

Starbucks establishes its longer lasting plus more profitable competitive advantages by broadly differentiating its espresso and coffee related products depending upon its competence and innovation.

Place:

The decisions of Starbucks about where to site its stores will depend on reaching its potential customers and providing better service to its existing customers. Its stores are usually clustered in high-traffic, high visibility locations. When it starts a new store near an established Starbucks, it is generally intended to ease long customer lines and improve service. It takes more than just location to be successful. Bringing in customers to Starbucks happens by providing high-quality coffee as well as creating inviting, comfortable places positioned in convenient location.

The store development technique for Starbucks is by joining new markets wherever the opportunity exists to become the leading specialty coffee merchant. Its current location totals 8, 505 worldwide by the entire year 2007.

Promotion:

There is not much conventional advertising because Starbucks found that there exists too much competition for consumers' attention in Television set, radio and printing media. Starbucks usually picks a couple of charities or events that reach the community it serves. This can inspire people outside and inside the business and reinforce the company's value and image. For example, after September 11, stores in New York, Washington D. C and Pennsylvania brewed coffee free of cost for relief staff.

People:

One of the strategy of Starbucks is to think that the Company is in the 'people development' business as well as in the coffee business. As stated in its quest ' Give a great work place and treat each other with value and dignity', Starbucks realizes that certain of the main resources contributing to success is their workers or 'associates' as referred by the business. Starbucks is wanting to imbed its ideals in the Company culture. They use these beliefs to provide employees a sense of meaning with their work even if it is just pouring a sit down elsewhere. The coffee chain provides medical, oral and eye-sight coverage to all or any employees, even including part-timers. The part- time lovers are also qualified to receive the business's stock program. The reason is to instill in its lovers a feeling of purpose, dedication, loyalty and excitement. Expectedly, what Starbucks benefits are the reduced recruiting and training costs.

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'PESTLE' Examination for Starbucks Coffee Company

Political:

  • High taxation imposed on farmers in those countries producing the coffee bean will usually signify Starbucks pay an increased price for the coffee they purchase. Any fluctuations in taxation levels in the industry are probably ultimately passed on to the consumer.
  • Trade issues will affect Starbucks predominantly when exporting and importing goods. When another country's administration imposes a tariff it not only results within an efficiency damage for Starbucks but large income transfers can become inconsistent with collateral. This extra demand can turn a bargain into a rip-off. Also, since 9/11, trade relations have been adversely damaged between your USA plus some other countries.
  • Starbucks should thoroughly investigate the politics steadiness of any country they intend to increase to. Changes in government can result in changes in taxation and legislation. The American elections may impact Starbucks as new legislation or new or existing authorities may generate taxes. Also, those countries in political turmoil or civil war (e. g. Zimbabwe at the moment) should be contacted with great extreme caution when considering new ventures.
  • The international overall economy must be helped bring into consideration as it can influence Starbucks' sales and markets. The aftermath of 9/11 was an example of an economical downturn that affected the world market.
  • A decrease in licensing and invite costs in those countries producing the beans for Starbucks would lower development costs for farmers. This saving would in turn be passed on to the customer.

Economic:

  • A go up in rates of interest means investment and extension plans are put off resulting in dropping sales for Starbucks and their suppliers. Also mortgage repayments go up so consumers have less disposable income to invest on luxury products such as espresso. Low interest rates will have the contrary effect of it.
  • If growth is low in the country of location of Starbucks then sales could also fall. Consumer incomes tend to fall in cycles of negative progress leaving less throw-away income. Consumer self-confidence in products can also land if the economical situation is bad.
  • Competitive pricing from competitors may start a price war for Starbucks that can drive down profits and profit margins as they attempt to increase, or at least maintain, their talk about of the market.
  • Globalisation of the coffee market has recommended farmers of the bean now earn less overall than they used to. This can bring about a decrease of people willing to do it for a full time income, which will suggest a decrease in coffee produced, producing a drop in Starbucks source levels and probably gains.
  • Starbucks are afflicted by exchange rates when coping with international trade. If the value of the currency falls in the country of a coffee supplier this permits Starbucks to get more because of their $ or when importing the goods with their country. This saving can be exceeded along to the customer. Exchange rates are permanently changing across the world in today's market.

Social:

  • Where income is sent out is another factor that Starbucks should look at as this also demonstrates the ideal location to aim their marketing or even to locate their stores. Coffee is more of an extravagance product so that it is those people/places with amount of throw-away income to spend that needs to be targeted the most intensely.
  • Starbucks wouldn't normally want to find to an area where the local human population have an unhealthy attitude to work. Recruitment would be difficult, training arduous, and staff turnover would be high. Behaviour to work are essential in different ways.
  • Transport needs to the premises must be considered for both staff and customers. Easy access is vital to ensure there is absolutely no excuse for staff to arrive past due or for customers not to visit.
  • Research shows the average age of the populace is getting more mature and beginning rates are stagnating. Starbucks is currently aiming it's product at young people but maybe these views changes in the long-term as the marketplace proportion for young people diminishes. One of the most profitable way forward may be to widen their marketplace despite the risk of alienating present customers.

Technological:

  • Developments in the technology of caffeine making machines and the personal computers that Starbucks use to perform their cash registers will allow their employees to work quicker and efficiently. This will bring about customers being served quicker and create the actual to provide more customers in a day.
  • In the short-term, Starbucks must identify the most effective software upgrades to make use of to keep up with the competition. This applies to the improving the accessibility of the website (www. starbucks. com) and also bettering the swiftness and quality of the service provided on the shop floor.
  • As a multi-national business empire, Starbucks gets the budget and the resources to truly have a cutting-edge R&D section. The website is very accessible, the facilities are advanced but more importantly new ideas are consistently being tried out in terms of the constantly updating menu.
  • The rate of scientific change in the current world market is high, much higher than, say, thirty years back. Much of this is down to the web and the acceleration with which information can be communicated around the globe. Starbucks will need to invest heavily just to stand still in their ever before expanding and expanding market, and even more so to try to stay before competitors.

Legal:

  • Starbucks have to be alert to the trade laws and regulations in the many countries they occupy and do business with. They have to ensure they are not in violation of e. g. , spiritual laws. Also, certain countries impose a tariff that has to be paid when goods are brought in/exported so this must be studied into account.
  • Each country has varying employment laws. Some may have a Sabbath day, some may have a limit on the amount of hours an employee may work weekly, and everything will have differing levels of least wage. Starbucks should think about these factors when deciding on relocation.
  • Starbucks may need to abide by local planning regulations when building shops or altering purchased sites, as certain areas of land may be protected or unsuitable. All things would be attended to by the local government.

Environmental:

  • Starbucks customers make a lot of throw away as they often times leave the shop with their cup of coffee and then dispose of it in the street. The packaging because of this glass must be carefully considered to make it as biologically degradable as you can. Certain other materials can be very bad for the environment.
  • Planning permission may not be granted if Starbucks desire to build in an area that might be harmful to the environment. The land may be shielded.
  • Starbucks need to carefully consider the techniques where they get rid of their waste as there are rigid laws generally in most countries to ensure a firm trading in their country gets rid of the throw away that is established in their business in a specific and useful way.
  • Starbucks should become aware of the physical and important power of organizations such as Greenpeace and Friends of the Earth.
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'SWOT' Evaluation for Starbucks Caffeine Company

Strength:

  • Strong brand and image

The reputation of brand and image of Starbucks allow brand reputation and consumer retention. Therefore, the expanding of stores to other countries is more skillful and easier.

  • Healthy financial performance

The financial performance of company has positive aspects. The income of Starbucks in 2007 were $9. 411 billion, growing at about thirty percent. The exponential growth in revenue and earnings creates the strong financial statement and stability to shareholders.

  • High-skilled management team

Starbucks has highly skilled and professional Chief executive officers (CEOs), for example, Howard Schultz, Orin Smith and Howard Behar. These lead to the rapid and stable development of Starbucks.

  • High technology

Starbucks brings the technology to use in the stores to be able to catch the attention of more customers. For instance, there are high-speed internet, website and pre-paid Starbucks card. It might be increase traffic in the stores especially in new era group.

  • High quality and creativity of products

Starbucks uses high quality of coffees and dairy products goods. Furthermore, new products are usually presented by Starbucks including caffeine and beverage line. Both of these allow Starbucks to have the ability to maintain degree of sales and keep opponents out.

Weakness:

  • High price

Starbucks has increased the purchase price due to growing cost of development, including cost of dairy products goods and cost of rent. The increase of price might have an effect on the falling of sales and customer retention directly

  • Clusters of store

Because Starbucks has a great deal of stores and also these are located in closed down areas, it contributes to the scramble of customers in each store. Clusters of store might cause inefficient performance of the business.

Opportunities:

  • Large consumer group

China has the biggest world's human population. Coffee taking in is more popular among young era, especially those people who have international education, which affects the coffee intake. Many of these teenagers have lived in european countries for a long time and they have acquainted with the caffeine culture. When returning to China they have got carried on residing in this fashion. Chinese language teenagers also like to choose american style coffee outlets as their favorite place.

  • Lifestyle

Modern lifestyle of Chinese language teenagers and men and women supports the proliferation of western coffee shops. Get together and discussing business in a warm and beautifully designed restaurant have become popular in China. As a result, the teahouse's domination has been challenged by the foreign caffeine house.

Threats:

  • Competitors

The global caffeine market is an extremely competitive sector. Starbucks is facing the increase of contests from other foreign players. The latest Starbucks' competition is Canadian string Blenz Espresso, which packages to open up a string of cafe in China where consumers can smoke cigarettes, while Starbucks is non smoke cigarettes stores.

  • Intellectual-property violation

Starbucks registered a lawsuit for brand infringement against Shanghai Xingbake which signs and symptoms, logos and titles very much like Starbucks. It would seem that likelihood of consumer misunderstandings are high.

Porter's Five Pushes Analysis

Porter's five makes analysis is an important tool for inspecting an organizations industry framework in strategic procedures. It helps the marketing consultancy to contrast a competitive environment. It tends to concentrate on the single, stand alone, business or SBU (Strategic Business Unit) rather than solitary product or selection of products.

Porter has recognized five competitive pushes that shape every industry and every market. They are: The risk of entry, The energy of buyers, The energy of suppliers, The risk of substitutes and Competitive rivalry.

The risk of entry:

The risk of entry features: Economies of level, The high or low cost of entry, Ease of access to circulation channels, Cost advantages not related to the size of the company, Whether rivals will retaliate? Administration action and How important differentiation is.

There will be a continuous pressure for Starbucks to respond and modify to these new entrants. The simpler it is good for new entrants to get into the market the more competition there is at the market. Although this really should not pose too much of a problem

for Starbucks as they employ a large share of the market which will be relatively immune system to the threat of new entrants. Starbucks is a company which may have many years of experience in roasting specialised espresso, in case a company was to get into the caffeine industry it would be extremely difficult for them to own same quality of coffee at a competitive price. To be a company's volume rises, so will its experience and knowledge which will decrease the price tag on their products

The electric power of customers:

Buyer power is likely to be high if lots of conditions are set up. There's a concentration of buyers, particularly if the quantities of acquisitions of the customers are high, the offering industry comprises a big volume of small operators, there are different sources of supply, the component or materials cost is a high ratio of total cost, the price of switching a distributor is low or consists of little risk, there is a threat of backward integration by the customer. This is high where there a few, large players in market If there are a large number of undifferentiated, small suppliers The cost of turning between suppliers is low for Starbucks.

The vitality of suppliers:

If the marketplace is dominated by few large suppliers rather than numerous fragmented sources, a suppliers bargaining electric power may very well be high. Although suppliers do have certain levels of power, it is limited. With Starbucks being 'the most well-known specialty restaurant chain in the world' and still expanding they ought to still be requiring coffee beans for quite a while. It really is safe to state that the Suppliers need Starbucks, just as much, if not more so than Starbucks need their products. Thankfully for Starbucks they buy their coffees immediately from producing countries: Latin America (50%), Pacific Rim (35%) and East Africa (15%).

The threat of substitutes:

This occurs where there is product-for-product substitution, where there's a substitution of need e. g. a bald head reduces the need for scalp gel, where there is generic substitution and lastly the attitude 'we could always do without'. A good example for Starbucks would be if an alternative to coffee was offered e. g. a customer switching from caffeine to tea.

Competitive rivalary:

Numerous factors donate to extreme rivalry between existing competition in an industry. This is probably to be high where entry is likely; there is the threat of alternative products, and suppliers and customers in the market attempt to control. That is why it is situated in the centre of the diagram. The degree to which rivals are in balance, this is where opponents are of an equal size which creates extreme competition among the competitors tries to gain dominance in the other, high set costs within an industry may result in price wars, differentiation is important as in a commodity market where products or services are undifferentiated there exists little to avoid customers transitioning between rivals. Starbucks do not really have any competitive rivals that are of similar size to them so there are not any rivals in the market that might be considered in balance with them. However, they need to maintain their excellent benchmarks and continually be searching for new innovations to be able to remain as the market leader.

Competitor Analysis

Competition is continuously growing against Starbucks every year as the industry develops. Competitors look to gain an advantage by price slashes, starting a rival product, ambitious expansion of production to increase market show or addition of significant alterations to something that other opponents must also embark on to maintain. The following are the current figures showing the market show of companies in the coffee industry.

35% Starbucks

20% Local Coffee Outlets

14% Internet Cyber Cafes

13% Caffe Nero

10% Costa Coffee

8% Espresso Republic

Culture Model

The culture associated with an company is the group of worth that helps its stakeholders understand what the organisation stands for, how it does things and what it considers important. Under culture model, we will describe the communication and decision making of Starbucks.

The Organisation & its environment

(Source: Davidson, 2002 pg. 73 Body 3. 1

In the diagram (above), owner created the company goal for Starbucks and the boarder of directors is going to lead company to achieve that company target. Therefore, the boarder of directors has to choose the suitable company culture environment for Starbucks in order to attain the company purpose.

The Value System

The value system is the inter-organisational links that are vital in the creation of the product or service of any company. It practices the creation of the service/product from natural material stage right through to the client purchase. Each instructions for the development of the product is detailed and explained at each level of the value system. The 'organization value chain' is the most crucial to a administrator because that is their company, however, a good director will understand the whole process and exactly how to manage every individual link and relationship to increase customer value. Managers should also need to learn the complete value system because almost all of the cost and value creation occurs in the supply and syndication chains.

For Starbucks, the 'distributor value chain' deals with where they find the coffee beans from that they use to build their end product - a sit down elsewhere. Starbucks buy all their beans immediate from the farmers in the producing countries cutting out any middle-man therefore keeping prices to a minimum. The countries supplying them can be found in Latin America, East Africa and on the Pacific Rim. Starbucks completely appreciate the necessity to oversee all areas of the worthiness system and we can see an example of this in their perseverance to obtain the highly sought Narino Supremo crop in 1992. This acquisition ensured some of the best quality coffee equipment on the globe would be reaped by Starbucks. The company has close interactions with their coffee exporters. They maintain this by working straight with them and training them. An excellent relationship here is essential and needs to be looked after.

The 'firm's value string' includes

The Firm's infrastructure; which is about the ways in which Starbucks want their organisation to run and how it is best to implement systems of planning, financing, quality control and information management, additionally it is where they have got made the decision to make high quality coffee from the best coffees as this is associated with the quality control.

Human Learning resource Management; It really is concerned with the activities involved in recruiting, handling, training, expanding and satisfying people within the company. For Starbucks this is where they have got made decisions about the actual fact that all employees are equivalent, even those on the shop-floor that will work over 20 time a week receive add-ons like free coffee and health care coverage, this was to make sure that the members of staff noticed as if they were valued by the company and would continue to provide a good service. Another carried out scheme is perfect for all Starbucks store staff to truly have a extensive 24 hour training scheme before these were allowed to work immediately with customers.

Technology development; Starbucks has a huge range of areas where it uses technology from regulating their stock levels to the money registers. There is also technology to permit customers can to order their espresso over the internet and then decide on it up from the store when they make it happen. Some stores now also contain personal computers where customers can gain access to the internet.

Procurement; this identifies the procedures for acquiring the various source inputs to the primary activities. For instance, the technique of acquiring the grade A coffees from suppliers to use in the Starbucks caffeine.

Inbound logistics; For Starbucks this implies receiving the coffee beans and other products that they need to make the merchandise in their stores off their suppliers and stocking these until they are used to make the product they are going to market.

Operations; this is actually the stage where Starbucks make the espresso in the store and program the other subsidiary products.

Outbound logistics; this is collection, storage area and distribution of coffee. A person actually investing in a glass of Starbucks coffee from the store.

Marketing and Sales; This is how consumers become aware of Starbucks coffee and purchase it. Starbucks is a worldwide company and their brand is recognised all around the globe, which means that marketing is much less necessary as it once was. Most people now recognise the name and associate the brand-image with high quality products.

Service; this consists of all the activities that enhance or maintain the value of the merchandise, e. g. unit installation, repair and training. This area is concerned with the associates of staff that offer with the customers, it targets the need to ensure the 'customer experience' of going to a Starbucks store is even more enjoyable due to the friendliness and efficiency of personnel and consistently high quality product on offer.

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