MARKETING PLAN

By:

Yzabela Adriana D. Barbadillo

Grant Justine Escano

 EXECUTIVE SUMMARY

Starbucks Corporation is an American multinational chain of coffeehouses and roastery

reserves headquartered in Seattle, Washington. It is the world's largest coffeehouse
chain. As of November 2021, the company had 33,833 stores in 80 countries, 15,444 of
which were located in the United States. Starbucks sells beverages, food, and other
items in 83 global markets. The company gets the vast majority of sales from beverages
and from its Americas segment, comprised of the U.S., Canada, and Latin America.

Starbucks is the world leader in the premium coffee market and has an amazing
success story. In this study the key factors for the successes of Starbucks are analyzed.
The distribution strategy of Starbucks, e.g. through coffee stores, grocery markets, and
new retail channels, is investigated. Additionally, problems of the rapid expansion of
Starbucks in national and international markets and their solutions are discussed.

Starbucks sells not only its coffee; it sells the “Starbucks’ experience”. The company is
successful to convey its vision to the customers. It can convince customers paying more
for high-quality products and a new life style. Starbucks reached its goal to establish
and leverage its powerhouse premium brand through rapid expansion of retail
operations, introduction of new products and store concepts, as well as development of
new distribution channels.

Starbucks has revolutionized the coffee business. The main marketing strategy is to
represent Starbucks’ store as a “third place” between work and home. The company
could increase the market share in existing markets and open stores in new markets
rapidly. Additionally, Starbucks always tries to expand its products portfolio. The
company cooperates and takes alliances with other companies to develop and distribute
new products. As the result, Starbucks has developed from a local coffee bean roaster
and retailer in the US to a multinational coffee and coffeehouse chain with more than
14,000 stores in 42 countries.

The rapid expansion of Starbucks leads unfortunately to some serious problems. The
company has to fight with the commoditization of Starbucks’ brand because of a series
of decisions which are necessary for the rapid business growth. Getting back to the
score, being smarter in efforts of time, money, and resources, pushing innovation, and
doing things necessary to once again differentiate Starbucks from all others are the
keys for business success in the future.
 INTRODUCTION

Current Situation of the Company

Today, Starbucks is the premier roaster and retailer of specialty coffee in the world. The
company has become number one, offering the highest quality Arabica coffee around
the globe. Starbucks is not only the first roaster and retailer of specialty coffee in the
world; it is also a special place where clients may enjoy exotic cold and hot beverages
with sweet and salty treats.

Environmental Factors

Starbucks coffee company is a very large and popular company that conducts domestic
and global business; it was defined to be the finest coffee in the whole world. Its mission
statement is “to inspire and nurture the human spirit- one person, one cup and one
neighborhood at a time. Starbucks Company is one of the companies that know how to
manage all the environmental forces that effect its marketing decisions. It is recognized
for the successful marketing factors that have been influencing the company’s global
and domestic growth more effectively in a positive way. These environmental forces are
the key trends that influence marketing.

Environmental forces: The five different environmental forces or factors that affect
Starbucks marketing decisions as well as its customers and suppliers are social,
economic, technological, and competitive and regulatory. The social factor of the
environment is known as demographics the people that are described based on their
ethnicity, age, gender, income, and occupation all over the world with the variety of their
cultures and values.

Starbucks Company is affected by the fact that the population is increasing nationwide
and that many people with the demographic differences are lovers of Starbucks coffee.
The economic factor has its tremendous impact on Starbucks market specially when the
household income barely increases but the products and services’ cost easily and
consistently increase that lead to a decrease in customers spending that may affect
Starbucks marketing decisions. The technological factor plays huge role in Starbucks
marketing decisions where inventions and innovations of new products are necessary to
maintain customer base.

Competitive factor refers to other coffee stores that compete. with Starbucks that try to
provide products that please coffee drinker’s needs to attract the market from
Starbucks. Regulatory force is the most important environmental factor that affects
Starbucks marketing decisions. Regulatory forces or regulation contains a number of
federal and state laws that business must follow under any circumstances. Regulations
are made to protect consumers and companies to ensure that competition and fair
business practices are applied legitimately.

Global economic interdependence Starbucks’s global economic interdependence is

important to operate the business in ways that contribute to the environmental and
economic factors. Global economic interdependence helps Starbucks Company to
create value within the diverse communities that leads to evolve the business model
that delivers value of companies and farmers that source Starbucks’s products,
customers, shareholders and neighborhoods where Starbucks Company has stores
(Starbucks Corporation, 2011).

Starbucks started applying trade practices in the year of 2000, 16 million paid off for fair-
trade quality that is used by the manufacturers who invest at the company level. Fair-
trade practices agreements allow coffee farmers to invest in their communities where
they can develop business that is capable to compete with other coffee producers and
protect their environments by educating communities of fair-trade benefits (Starbucks
Corporation, 2011). The importance of demographics and physical infrastructure

Demographics and physical infrastructure are very important for Starbucks company
where demographics workforce is classified as mostly as women who working as a
larger number than men and minorities. Physical infrastructure where Starbuck
Company must ensure the availability of all needed work-related tools, transportations,
and communication among all workers. Social responsibility and ethical cultures
Starbucks are committed to conduct social and ethical responsibility that is strongly
arrange in a line that dive to create a business, like Starbuck stores that increases
share holds values by maintaining the solid relationships.

Ethics and compliance are crucial for Starbuck Company successes, for that reason the
company must ensure ethics are incorporate in all lines of business of the Company
where Starbuck is providing a business ethics and compliance training to help partners
to voice concerns, find answers to their concerns and maintain an audit line for
customers, investors, and vendors. The effect of technology on Starbuck Starbucks
company is been tremendously affected by technology. The use of Wi-Fi in their stores
is one of the key successes for Starbucks business growth.

The consistent use of Wi-Fi internet access is encouraging people to complete most of
the out of the office meetings at Starbucks where workmates can get together to plan
for a project, where a home buyer meets the real estate agent to sign a purchase
contract agreement where borrower can to close on their loans in a very interactive fun
place like Starbucks. In addition to, the well enhanced technological system that
employees use at all times. Conclusion Starbucks not only recognizes the central role
that social responsibility plays in its business. It also takes constructive action to be
socially responsible (Hartley & Rudelius, 2011).

Competitive Analysis

As at 2016, Starbucks was operating in more than 23,500 locations worldwide with an
average of 240,000 employees. Its assets stood at $12.5 billion dollars with a net
operating income of $2.80 billion dollars. As a representative of ‘second wave coffee,’
Starbucks is known for its distinguished quality coffee, top notch customer service and
best-tasting coffee made from espresso machines.
Here are top 11 competitors of Starbucks:

1. Costa

This is the second largest coffeehouse in the world after Starbucks and the largest in
the UK. Founded in 1971 in the UK, Costa coffee has expanded to over 3000 stores in
over 30 countries. In the UK alone, it operates over 2000 restaurants. Mid this year,
Costa coffee moved its coffee roaster to Essex. An investment that cost a close to 40
million pounds. This, in turn, increased the roasting capacity to 44,000 tons of coffee
beans from the initial 11,000 tons in a year.

As at the end of 2016, Costa Coffee’s net income was approximate £153 million with
revenues exceeding £1.167 billion. This company reaches to its customers through its
advertising slogan ‘a coffee for every mile’ whose aim is to have as many coffee shops
as possible. Costa Coffee is also probably the only Starbucks Competitor on this list
which exclusively deals and promotes its coffee. All other Starbucks competitor have a
combination of different products to offer.

2. McDonalds Mc Café

Mc Cafe is strongly coming up as one of the Starbucks Competitor which is gaining

market share. This is because of the backing it has with the huge number of
McDonald’s stores across the globe. This coffee house not only specializes in coffee but
food and other beverages as well. It was formed in Australia in the year 1993 and is a
true reflection of espresso coffees. In the year 2015, Mc Cafe was among the top three
coffee sellers with over $1.4 billion from slightly over 4,500 outlets. However, this is set
to increase after Mc Cafe upgraded its equipment to ensure consistency in the taste of
its coffee. Currently, it’s ranked the largest in New Zealand and Australia.

3. Dunkin Donuts

Dunkin is a donut company as well as a coffee house based in Massachusetts USA.

Founded in 1950, it has expanded to become one of the largest baked food and coffee
chain in the world. It operates in more than 35 countries with over 11,500 restaurants. In
the year 2010, its sales were estimated to be 6 billion dollars and an estimated revenue
stream of around US$828.9 Million as per the 2016 data. In terms of production, Dunkin
produces 8% donuts, 65% drinks and 27% of other food items. Its presence in 35
countries itself tells the success story of the company.

4. Café Coffee Day

Café Coffee Day is another global company and largest Arabica beans producer and
Exporter in Asia. Started in 1996 CCD is now a world brand with its initial investment
capital estimated to be over160 million dollars. As at mid-2015, Café Coffee Day had
over 1,500 outlets across 28 India states. The company is well known for vertically
cutting down on costs; this is from owning Arabica coffee plantations, making furniture
for its outlets and also making coffee machines. Even though it started in Asia, it has
expanded to some countries in Africa, Czech Republic, and Nepal.
Its initial marketing strategy was the change of original Logo with the new Logo
showcasing the chain as a ‘place to hold talks’ leading to total revamp of interiors and
addition of lounges.
INDIRECT STARBUCKS RIVALS

5. Independent Fast Food Chains and Bakeries

Coffee is not only sold in large chains, but it is also sold in local bakeries and small
coffee centers. In fact, travel sites are generally full of coffee shops you should
experience in a place that you visit. These coffee shops are famous for their
personalized service and the friendly staff whom you know very well. As a result, the
100’s of coffee shops around the corner are the most widespread Starbucks Competitor
and a true competitor for the coffee chain. Starbucks has itself strived hard to become
the coffee shop around the corner. But across the world, there are many coffee shops
which become an unorganized Starbucks Competitor.

6. McDonalds

Starbucks does not serve only coffee, but it also has small pizza’s and other eatables to
accompany the coffee. When we take the coffee out of the equation, Starbucks is
literally a fast food place as well. As a result, McDonalds can be considered a strong
Starbucks Competitor. McDonald’s is an American Fast foods store chain that was
founded in the year 1940. As one of the largest hamburger restaurant chains in the
world, it operates 3700 outlets in over 100 countries.
To respond to different consumer tastes and preferences, McDonald’s also sells
chicken products, cheeseburgers, wraps, milkshakes, desserts, salads, fish, soft drinks,
smoothies and a variety of breakfast items. Its marketing strategies include franchising
and change of logo. McDonald’s also receives additional revenues from royalties, rent,
and fees paid by franchisees. Even though it started as a hamburger stand, its
marketing techniques have propelled it to the global map.
According to the 2012 report published by BBC, McDonald’s is the 2nd largest private
employer after Walmart with almost 2 million employees of which 1.5 million are
employed by franchises.

7. Kentucky Fried Chicken

KFC is the world largest restaurant chain that specializes in fried chicken. Its
headquarters in Kentucky USA oversee operations of 20,000 branches worldwide in
more than 120 countries. Founded in 1952, KFC managed to popularize and market
fast food chicken though franchising and advertising. Advertising was done on
televisions with the initial advertising budget estimated to be around 4 million Dollars. In
the late 1960s, KFC hired a national advertising agent by the name ‘Leo Burnett’. In the
mid-1970s, the Leo Burnett campaign dubbed ‘get a bucket of chicken’ made KFC one
of the most popular fast food chains in the USA.

Currently, its food menu has expanded to include french-fries, salads, side dishes,
coleslaws and soft drinks among others.

INDIRECT STARBUCKS RIVALS IN COFFEE ALTERNATIVE SEGMENTS

8. TAZO

TAZO Company produces herbal tea. Based in Portland, it initially started as a fieldwork
and later purchased by Starbucks who rebranded it to its current global status. TAZO
Tea sells because of its unique taste, aroma and medicinal qualities. According to 2010
data, TAZO revenues were estimated to be $1.3 billion. Currently, it operates in more
than 46 countries with over 17,000 stores operating under Starbucks.

9. TWINNINGS

Twining is owned by the British Food Association. Its brand of tea has gained
international recognition due to its concentration, flavors, and Aroma. Since its inception
in the year 1706, it still maintains its market value and popularity. Twining tea contains a
lot of caffeine that acts a stimulant thereby helping one to be an active whole day long.
In 2017, owing to enormous consumption, it was voted among the top ten best tea
brands in the world. With over 198 unique tea blends, it has an annual turnover of 8.5
billion dollars and employees around 43,000 employees.

10. TETLEY

Tetley is one of the largest UK tea company. In the whole world, it’s the second largest
tea manufacturer. With specialization and expertise, Tetley produces over 65 different
tea flavors all over the world. In 2014 alone, it was estimated to have around 6.6 million
consumers in the UK alone. In the year 2006, for marketing reasons and to achieve
dominance, Tetley brand was purchased by Tata group at $1.4 billion dollars and
rebranded to Tata tea which is currently the second largest tea manufacturer in the
world after Unilever.

After rebranding, it’s operating profits increased by 60% to around $61 million. It also
introduced fruit tea variants and high margin green tea. Tetley’s annual production
stands at 60,000tonns and is valued at around $22 billion.

11. DILMAH

DILMAH Tea Company was founded in 1974 in Sri Lanka where tea was famously
referred to us Silone Tea. It late expanded to Indonesia, Turkey and 90 other countries.
DILMAH Tea is now a global brand thanks to the advertising and endorsement on the
team jerseys by the Sri Lanka national Cricket team. According to reports from Data-
monitor, Ceylon tea which is DILMAH’s parent company that was incorporated in 1981
is the 6th largest in the world with an estimated revenue of $7.92 billion and net income
of $1.04 billion.

Some of its brands include green tea, flavored tea, masala chai, Ceylon tea, herbal
infusions, iced tea et cetera.

MARKETING TRENDS

Starbucks introduces new beverages and food to usher in 2022. Starbucks new winter
menu offers a range of beverages and fan-favorite foods to help customers bring in the
new year with the right choices for their lifestyle and taste preferences. Beginning
January 5, customers can enjoy the new Honey Almond milk Cold Brew, Pistachio
Latte, Kale and Portabella Mushroom Sous Vide Egg Bites, and Earth Cake Pop as well
as celebrate the return of the Honey Almond milk Flat White and Red Velvet Loaf.
There are several convenient and safe ways to cozy up Starbucks new winter menu
line-up. Customers can use the Starbucks app to locate a store, view store hours, order
ahead and use contactless payment, and determine the most convenient pick-up option,
including: in-store, at the door, drive-thru, and curbside pickup where available. Those
looking for Starbucks without leaving home can place an order for delivery through
Starbucks® Delivers via Uber Eats (check the Uber Eats app for availability and
restrictions).

Starbucks Corporation (NASDAQ: SBUX) faces a more encouraging outlook for 2021
and beyond as trends are "moving strongly in the right direction" for the coffee chain
and some of its rivals, according to foot traffic analytics firm Placer.ai.

What Happened: Foot traffic data shows visits to Starbucks stores are down just 21.3%
year-over-year for the week beginning March 1, Placer.ai said in a soon-to-be-released
report. This marks the brand's best performance so far in 2021.

By comparison, rival Dunkin' Donuts saw its foot traffic trends fall 15.4% year-over-year
during the same time period. Panera Bread's 24.6% traffic decline in the first week of
March marked its best performance since the COVID-19 pandemic began in early 2020.

Encouragingly, Starbucks' momentum can be traced to the start of February. Since

starting the week of Feb. 8, Starbucks has shown consistent week-over-week growth as
some form of return to normalcy started to play out and restaurants are reopening at a
much faster pace compared to prior months.

Market Potential

Execution of corporate social responsibility is one of Starbucks' main strategies;

participating in the improvement of coffee and tea farmer's lives is their priority together
with saving the environment through more eco-friendly stores, reducing water
consumption or serving coffee in recyclable cups. Further, their implication on social
media to be close to their customers is also part of their marketing strategy by getting
individuals involved in projects and ideas for future improvement are welcome and in
the end the research and development is done for free by their customers.
While Starbucks can be criticized for expanding too rapidly and harming local cultures
by transforming them into an American experience, it is loved my most consumers and
highly followed on social media. In the future, Starbucks should continue expanding
their product portfolio and closely follow new technological trends as their target
population has this expectation. With an increasing number of customers, Starbucks
must be well organized and pursue their individual client approach which makes their
brand so unique and makes the customers come back regularly. Overall, however,
Starbucks is very successful in doing this and has constantly increasing profits yearly.

Marketing Research Findings

Starbucks has been a successful company over many decades largely because of its
stellar business strategies. The company expertly employs market research to keep its
offerings and marketing messaging in line with consumer sentiment.

Market research can take many different forms, including following cultural trends,
monitoring social media, gathering consumer feedback and in-store product testing.
Starbucks does all of these and more.

One notable way that Starbucks conducts its own form of market research is through its
My Starbucks Idea platform, which it rolled out in 2008 as part of the company's
"Transformation Agenda" at the time. Since then it has gone through some different
iterations, but the basic idea behind it remains the same: customers, potential
customers, and employees can go to the website to submit any ideas they have for new
offerings, changes they’d like to see to anything that already exists, requests to bring
back old products, and more.

The company also takes advantage of social listening, which involves monitoring digital
platforms such as Facebook, Instagram, Twitter, and Reddit to find out what customers
are saying about the brand and collect feedback that could help the brand improve. As
of December 2018, Starbucks had 11.5 million followers on Twitter, 17.3 million
followers on Instagram, more than 37 million likes on Facebook, and nearly 200,000
subscribers on YouTube.

Starbucks regularly tests new products in select stores, which helps the company figure
out if it needs to make any changes before launching them in other markets — or if it
will even continue the launch in other markets. Starbucks also uses data from several
market research firms, as well as data gleaned from its own stores, to shape its new
product lines.
Examples of how Starbucks has used market trend data, digital consumer feedback and
in-store product testing are the launches of its dairy-free milk alternatives.

Market research company Mintel reports that during the period from 2012 to 2017,
overall sales of dairy-free milk alternatives in the U.S. grew 61 percent, with almond,
coconut, and soy milk being the most popular types. Starbucks has kept pace with this
trend among health-conscious consumers and customers with special dietary
limitations. The company began offering soy milk in 2004. In 2015 it launched drinks
with coconut milk, and in 2016, it began offering almond milk. Starbucks also began
offering oat milk in its European stores in 2018 to keep up with trends there.

The company says that a major reason that it launched these dairy-free milk
alternatives was that they were some of the most requested offerings on its My
Starbucks Idea platform. During 2014, the company also tested the use of coconut milk
in stores located in Cleveland, Los Angeles, and Oregon. The results of the tests and
combined market research were positive enough for Starbucks to begin rolling out
coconut milk nationwide.

At the time of the coconut milk launch, former Starbucks Vice President of Brewed
Espresso, Christine Barone, told MarketWatch, “Delivering the options our customers
want is always the highlight of my day. We have a high bar for anything we pair with our
high-quality espresso and this coconut milk is smooth and perfectly complements the
coffee.”

BACKGROUND OF THE PLAN

Property Needs Analysis

Starbucks has built its reputation to be considered as an innovative connoisseur of
gourmet beverages. Starbucks strives to provide a genuine, artistry atmosphere to
communities seeking to indulge in high quality gourmet products ranging from coffee,
tea and pastries. Starbucks mission statement "seeks to inspire and nurture the human
spirit-one person, one cup and one neighborhood at a time." (“Mission Statement |
Starbucks Coffee Company”) There are six principles Starbucks lives by: coffee,
partners, customers, stores, neighborhood and shareholders. These principles are the
hub and driving force for the strategic operation and innovation Starbucks enhances on
a daily basis.

Their main motto is quality, passion, human connection, responsibility and

accountability. "As of September 30, 2012, the company operated 9,405 company-
operated stores and 8,661 licensed stores." (“SBUX Profile | Starbucks Corporation
Stock - Yahoo! Finance”) Company operated stores are operated directly by a company
in order to sell their own products at a retail location. "A licensed store allows a
company to rent a space within an establishment such as a grocery store, college or
bookstore." (“Ideas in Action Blog”) Starbucks has created a perfect convenience
mechanism to their customers by strategically placing their stores within businesses that
makes it easier for the customer to purchase their products while on the go. Starbucks
not only generates revenue from their coffees, teas and pastries but also the selling of
the Starbucks brands itself. "Starbucks has branded their products to The North
American Coffee Partnership with the Pepsi-Cola Company, as well as licenses its
trademarks through licensed stores, grocery, and national foodservice accounts."

The industry’s demand for premium coffee and snack products are mainly driven by a
number of factors which include disposable income, per capita coffee consumption,
attitudes towards health, world pricing of coffee and demographics. This industry is
highly sensitive to the macroeconomic factors that affect the growth in household
disposable. During the recession, the decline in household disposable income due to
increased unemployment and stagnant wages, caused a downward pressure on the
revenue and profitability margins in the industry. Another crucial factor for analyzing the
demand in the industry is the per capita coffee consumption where the increase in
coffee consumption increases the revenue of coffee & snack shops. The main driver of
this consumption increase would be the increase disposable income, as the economy
improved, and consumers start to relax their budgets. This driver has a positive effect
on market revenue. Per capita coffee consumption is expected to increase in 2014.

As coffee beans are the primary input in the value chain of the industry participants, the
prevailing volatile prices of coffee beans determines market costs and profitability
margins. The world price of coffee has risen sharply in recent years due to growing
demand in other countries and the resulting supply shortages. During the five years to
2018, coffee bean prices are projected to decrease, which will likely translate into lower
market costs and higher profitability.
 SWOT Analysis

STRENGHTS:

Strong Market Position and Global Brand Recognition:

Starbucks has a significant geographical presence across the globe and maintain a
36.7% market share in the United States and has operations in over 60 countries.
Starbucks is also the most recognized brand in the coffeehouse segment and is ranked
91st in the best global brands of 2013.8. Starbucks effectively leverages its rich brand
equity by merchandizing products, licensing its brand logo out. Such strong market
position and brand recognition allows the company to gain significant competitive
advantage in further expanding into international markets and also help register higher
growth in both domestic and international markets. Over the years, they have achieved
significant economies of scale with superior distribution channels and supplier
relationships.

Products of the Highest Quality:

They give the highest importance to the quality of their products and avoid
standardization of their quality even for higher production output.

Location and Aesthetic appeal of its Stores:

Starbucks has stores in some of the most prime and strategic location across the globe.
They target premium, high-traffic, high-visibility locations near a variety of settings,
including downtown and suburban retail centers, office buildings, university campuses,
and in select rural and off-highway locations across the world.10 This has earned them
a significant competence and advantage to be able to penetrate prime markets and tap
into customers convince factor. Their stores are visually appealing and have a ‘cool’
factor attached to it with being designed to reflect the unique character of the
neighborhood they serve in and environmentally friendly. They provide free WIFI, great
music, great service, warm atmosphere and provide an environment of community
meeting spot, which forms a wider part of the Starbucks Experience.
Human Resource Management:

Starbucks is known for its highly knowledge base employees. They are the main assets
of the company and they are provided with great benefits like stock option, retirement
accounts and a healthy culture. This effective human capital management translates
into great customer services. It was rated 91st in the 100 best places to work for by
Fortune Magazine.

Goodwill among consumers due to Social Responsibly Initiatives:

Their stores are community friendly, focused on recycling and reducing waste. They
build goodwill among communities where they operate.

Diverse Product Mix:

Starbuck portfolio of products shows they cater to all age groups demographic factors

Use of Technology and Mobile Outlets:

Starbucks efficiently leverages technology with its mobile application “Starbucks App’ in
both apple and android software’s. They make significant investments in technology to
support their growth every year.

Customer base loyalty:

Starbucks has cult following status among consumers and they have also implemented
loyalty-based programs to drive loyalty with the Starbucks Rewards programs and
Starbucks Card. The Starbucks Card is a value card program that provides
convenience, support gifting, and increase the frequency of store visits by cardholders
and integrated with their mobile application.
WEAKNESSES

Expensive Products:

While Starbucks does differentiate their products with being highly quality couple with
the whole ‘Starbucks Experience’, in times of economic sluggishness, consumers to
have so switching costs to competitor’s products with lower prices and forgo paying a
premium. These premium prices could also pose some weakness for it to succeed in
developing countries.

Self-Cannibalization through overcrowding:

By aggressive expansion and high saturation due to overcrowding in the market leads
to self-cannibalization and diminishes long term growth targets of Starbucks. This is
happening especially in the United States where Starbucks operates 8078 stores.

Overdependence in the United States market:

In line with self-cannibalization of the US market with 8078 stores, Starbucks generates
a huge percentage of their total revenue from the US and this makes it very sensitive to
prospects of the US economy and growth.

Negative large corporation image:

Like any large corporation, Starbucks does come under increased scrutiny and have to
invest in corporate social responsibility activates and maintain tight control over labor
practices.
American/European coffee culture clash with that of other countries:
Starbucks coffee culture may not widely acceptable in some countries as part of their
international expansion strategy.

OPPORTUNITIES

Expansion into Emerging Markets:

The increase saturation and self-cannibalization of the US market makes its

international strategy even more important. Starbucks has made good inroad into many
countries, with India recently joining the list with a joint venture entry.18 Starbucks has a
great growth potential in further expanding into the emerging and developing markets.
They can leverage their size, experience, financial prowess and efficiencies to make
new market share.

Expanding Product mix and offerings:

Starbucks recently started to expand their product mix by venturing into the Tea and
fresh juice product offerings with a smart acquisition strategy.20 This provides
significant opportunities for Starbucks.

Expansion of retail operations:

Starbucks currently sell its packed coffee products, iced beverages and merchandizes
through large box retailers. This market’s potential is yet to be fully realized and this
provides Starbucks great opportunities for the future to future monetizes their brand.

Technological advances:

Starbucks has leveraged the use of mobile applications and has an investment
partnership with Square, a mobile payments app that is integrated with its Starbucks
app. This creates an ease of use process for customers, aligns customer loyalty through
reward programs. Starbucks has already set the bar in the industry with this
advancement and about 10% of its transactions in the US have been made using
mobile applications. This is a growing field and would drive more business to their
stores as technology advances.

New distribution channels:

Starbucks introduced a beta version of a delivery system called Mobile Pour. This
presents a great opportunity for the future by expanding their end product distribution
systems and could drive more revenue if the implementation is successful.

Brand extension:

Starbucks carries a powerful brand image and it can leverage it to extend into horizontal
lines of its business and also venture into product diversification with keeping brand
dilution risk in check.

THREATS

Increased Competition:

This is by far the biggest threat that Starbucks faces with the market being at a mature
stage, there is increased pressure on Starbucks from its competitors like Dunkin
Brands, McDonalds, Costa Coffee, Pete’s Coffee, mom and pop specialty coffee stores.
Dunkin Brands had at its main threat in the US market by trailing Starbucks with a
24.6% share.

Price Volatility in the Global Coffee Market:

There has be significant fluctuations in the market prices of high-quality coffee beans,
which Starbucks can’t control.

Developed Countries Market Saturation:

Starbucks derives a significant amount of its revenue from the development markets
and there is increased market saturation currently.
Developed Countries Economy:

In an increasingly economically integrated world, an economic crisis like the one in 2008
could have a trickle-down effect from the developed markets to the developing markets.
This threat would hurt revenues for Starbucks as consumers shift away from premium
product mix to stay in limited budgets during economic hardships.

Changing Consumer tastes and lifestyle choices:

The shift of consumers toward more healthy products and the risk of coffee culture
being just a fad represent a threat for Starbucks going into the future.

Market Positioning Statement

Starbucks has a descriptively simple statement to inspire and nurture the human spirit
“one person, one cup, and one neighborhood at a time”. Starbucks positioning strategy
was customer base so that it can give the best service more than what the customers
expect.

OBJECTIVES

Goals
Starbucks sells not only its coffee; it sells the “Starbucks’ experience”. The company is
successful to convey its vision to the customers. It can convince customers paying more
for high-quality products and a new life style. The goal of Starbucks is to establish and
leverage its powerhouse premium brand through rapid expansion of retail operations,
introduction of new products and store concepts, as well as development of new
distribution channels.

With its 2016 Global Social Impact Report, Starbucks is sharing its vision for 2020 and
beyond in the areas of coffee sustainability, greener retail and community engagement.
Its comprehensive set of goals includes the company's recent hiring commitments,
planting trees, renewable energy and food rescue.

Quality Objectives

According to Starbuck’s annual report 2011 their objective is “to maintain Starbucks
standing as one of the most recognized and respected brands in the world.” They plan
to achieve the respect and to be recognized through the use of ethnical sourcing and
environment stewardship. If the company uses ethnical sourcing the consumer would
be more appealed to purchase from Starbucks because they know that it is reliable, and
the people are fairly paid for the coffee beans. This also applies to the company being
environmentally aware because it is a very important issue that impacts the world and
once again is another factor that allows the consumer to appeal to the products from
Starbucks more. Their tactic is to promote and advertise their use of ethically sourced
products to their customers and environmentally print on their products (cups, tissues,
cup sleeves, bag) that they are environmentally friendly this serving as a constant
reminder that they are environmentally aware.

Starbuck’s retail objective is “to be the leading retailer and brand of coffee in each of our
target markets by selling the finest quality coffee and related products, and by providing
each customer a unique Starbucks Experience. “ Their strategy is to “expand [the]
global retail business to increase [the] market share in a disciplined manner, by
selectively opening additional stores in new and existing markets, as well as increasing
sales in existing stores, to support [the] long-term strategic objective” as well as having
“superior customer service as well as clean and well-maintained company-operated
stores that reflect the personalities of the communities in which they operate, thereby
building a high degree of customer loyalty.” Their tactics would be to create new and
innovating products to create a loyal customer supporting the strategy.
In 2020 Starbucks committed to a resource-positive future, formalizing environmental
goals to cut its carbon, water, and waste footprints by half. As a progression against
those goals, the company commits to Carbon Neutral Green Coffee and to conserve
water usage in green coffee processing by 50%, both by 2030.

Business Objectives: Starbucks business objectives are to earn good profits and doing
good things in the world through their commitments in providing high quality product and
services.

Functional Objectives: In order to achieve its corporate and business objectives,

Starbucks was disciplined in the expansion outside the United States and the
development of its corporate social responsibility program.

TARGET MARKET

Primary Market

According to Armstrong and Kotler (2006) market segmentation is a process of

subdividing a market into buyers’ distinct groups with different characteristics, needs, or
behavior that required marketing programs or separate products. Starbucks' main
approach to gain greater market share in the industry is by paying a close attention to
its market segments. It not only uses demographic segmentation in terms of gender,
income, age, and ethnic background but also employ geographic segmentation drawing
upon country or region of the world and its market size in that specific region and
climate. The demographic segmentation by Starbucks is between 25 and 40 years of
age with high incomes, the second target group is 18 to 24 year of age and belongs to
richer families. Mostly Starbucks customers belong to the Generation Y which was born
between 1977 and 2000 (Fromm 2014). Psycho graphic segmentation shows that
customers belong to the upper-middle class and well-off customers who were educated
(Rafii,2013). Starbucks marketing strategies are situated between mass marketing and
segment marketing; they are targeting a broader public; however, soon they realized
growth opportunities in the industry and set strategies to cater a wider array of the
market segment. Starbucks has also segmented its markets by demographically and
geographically selecting the store location with educated and coffee lovers.

According to Kotler (2016) market targeting is a process of evaluating all market

segment’s interest and selecting one or more segments to enter. Starbucks target
market is from the middle to high-income office workers with a desire to purchase
premium products. Schultz wanted to make Starbucks the place where their customers
could relax, gather and interact with one another. This made them be vigilant about their
quality control and meet the high expectations. It requires a mass market approach
through designing a distinct marketing and products programs for the different
segments (Lynn 2011). Concerning the homogeneous or mass marketing, the company
pay no attention to the differences in the market segment and uses one strategy to
target the whole market (Kotler 2016). Since the launched, they practiced
undifferentiated marketing strategy, created and maintained the marketing mix as they
considered the market as a single segment. A major challenge in using this target
market strategy is developing the brand that satisfies every customer. They used their
services without quality compromise for attaining this targeting strategy and
aggressively growing in the industry throughout the years.

The demographic segmentation by Starbucks is between 25 and 40 years of age with

high incomes. Its target demographic is urban and affluent, often on-the-go white-collar
professionals looking to take their caffeine fix with them to the office. The company
considers its core customers to be educated, with an average age of 42, and average
income of $90,000.

Secondary/Marginal
Accounts

Starbucks has been able to stay ahead of customer trends through strong product
innovation and understanding of customers preferences. Starbucks targets customers
who value quality coffee. This differs from many of the top competitors who target the
value coffee market as opposed to higher end coffee types. On top of products,
Starbucks has stayed up to date on leading edge technology including mobile online
ordering through their applications, as well as Uber Eats. Overall, we believe that
Starbucks true target market is on consumers of the millennial age and Gen Z age. The
following chart outlines the prices that people are willing to pay for a small cup of coffee
by age group.
The younger generation, specifically the 18-29 age group was very willing to pay over
$5 for a small cup of coffee. Compared to the younger generation, the 60+ age just
wants to pay $1 for a cup of coffee. In general, this demonstrates that the older
generations do not see value in premium coffee, but the younger generation does. We
believe this signal the changing consumer preferences and demonstrates how to retail
coffee industry is positioned to continue adapting to more specialty coffee. This
preference of younger consumers to pay more for specialty coffee will help Starbucks to
increase their operating margins going forward.

New Accounts

SEATTLE--(BUSINESS WIRE) Starbucks Corporation (NASDAQ: SBUX) today

reported financial results for its 14-week fiscal fourth quarter ended October 3, 2021.
GAAP results in fiscal 2021 and fiscal 2020 include items that are excluded from non-
GAAP results. Please refer to the reconciliation of GAAP measures to non-GAAP
measures at the end of this release for more information.

“Our strong finish to fiscal 2021, including record performance in the fourth quarter,
demonstrates the resilience of Starbucks and reinforces the value of the bold strategic
moves we have taken over the past two years. Through it all, we have thoughtfully
navigated a strong recovery with an eye towards our future, all guided by our Mission
and Values,” said Kevin Johnson, president and CEO.

“Today we announce we will be doubling-down on our investments in our partners, the

heartbeat of our company. We know that when we exceed the expectations of our
people, they in turn exceed the expectations of our customers - which creates value for
all of our stakeholders - our partners, our customers, our communities and our
shareholders. We anticipate that our strong business momentum, increased operating
efficiency and continued global store expansion will fund these unprecedented
investments while delivering yet another year of significant growth,” concluded Johnson.

The company will introduce fiscal year 2022 financial targets during its Q4 FY21
earnings conference call starting today at 2:00 p.m. Pacific Time. These items can be
accessed on the company's Investor Relations website during and after the call. The
company uses its website as a tool to disclose important information about the company
and comply with its disclosure obligations under Regulation Fair Disclosure.
The company's financial results and long-term growth model will continue to be driven
by new store openings, comparable store sales and operating margin management.
These key operating metrics are important indicators for the growth of the business and
the effectiveness of the company's marketing and operational strategies.

MARKETING STRATEGIES

Product Strategy

The Product is the value offered by a brand to its customer.

Starbucks is a brand that is renowned for its premium quality coffee. It offers more than
1000 varieties of food items including coffee, smoothies, cookie, tea, muffins, pastries,
doughnuts, fresh fruit juice, blended beverages and much more.

A Simple Coffee cup with the Handwritten name of the customer on it is the unique
product design strategy of Starbucks which is a signature favorite among customers.

Starbucks commits to the “Barista Promise “in which they make their coffee and drinks
in the way that customers desire. Customers can request to customize drinks.

Thus, the product categories in which Starbucks deals are:

1. Coffee
2. Tea
3. Baked Goods
4. Frappuccino
 5. Smoothies
6. Starbucks Merchandise (Mugs, Instant coffee etc.)
7. Other food items and beverages.

Pricing Strategy

The pricing of a product is a delicate decision that matters to consumers the most. The
price of a product is set by keeping in mind the brand image and the demand for the
product in the target market.

Starbucks adopts the Premium Pricing Strategy. The purpose behind this strategy is to

cultivate a sense in the market that their product is superior to others.

Starbucks sells its products at high prices to their target audience.

The company satisfies its customers and justifies its prices by providing excellent
service and ambience at its stores. 

Starbucks’ price strategy is focused on customer experience and product quality which
also helps them stand out from the competition and thus becomes a status symbol for
its customers.

Promotional Mix

The promotional mix refers to the unique blend of advertising, sales promotion, public
relations, social media, and e-commerce used to promote a product. The promotion
strategy is a part of the marketing mix that refers to inform, persuade, or remind target
audiences about a company’s products.

Starbucks promotes its products by the following mediums:

  Advertising
 Offline
 Online
 Social media
 Sales promotions
 Word of mouth marketing.
 Starbucks promotes its products via both offline and online mediums
of advertising.

It uses big banners for the promotion of its beverages and ongoing offers.

The Starbucks marketing team regularly runs different ad campaigns on online

advertising media platforms like Google ads and Facebook ads. 
 Starbucks is highly active on various social media platforms like Instagram,
Facebook, Twitter, Snapchat etc. The company promotes its products on each
platform with very deliberately designed images and videos that easily connect
with its audiences. It also provides many offers at its coffeehouses. They also
issue discount coupons in collaboration with payment apps. All of these are sales
promotion incentives.

Word of mouth marketing is the strategy in which your existing customers become the
biggest promoters of your brand. Starbucks’ brand image helps immensely in this
regard. By focusing on customer relationships and customer satisfaction, they have
been able to successfully bank on consumers’ recommendations. The chain of
recommendation from one customer to another is the strategy that boosts their sales
organically.

Distribution Strategy

The place and distribution strategy are a component of the marketing mix that plays a
vital role in the success of any business. The location where the business runs its
operations is a crucial factor.
Starbucks’ place strategy has played a huge role in the success of the chain stores.  It
has more than 30,000 stores in around 83 countries across the globe. Starbucks offers
the maximum number of their products at their stores. However, they also have the
following chains of distribution for their products.

 Coffeehouses
 Retailers
 Mobile applications
 Starbucks highly focuses on the design and environment of its coffeehouses
where customers enjoy a premium experience. They open their stores at “it”
places like Malls and Popular Markets.
 Starbucks also sells their merchandise with different brands and retailers
 The company also has an e-commerce presence integrated with e-payments.
Customers can easily order their coffee from the Starbucks app and pick up their
order from the store.

Starbucks in India also collaborates with food delivery partners like SWIGGY and
Zomato. Customers can order their coffee from these apps and get easy delivery at
their homes.
 TIME TABLE

Philippine Branches
 BUDGET

In its fiscal year ending in September 2021, Starbucks spent 305.1 million U.S. dollars
on advertising. This figure represents an increase in global advertising investments
compared to previous year – in 2020 the coffee chain spent 258 million dollars on
promoting its products and services. On a global scale, in 2021 the Starbucks brand
was valued at 38.44 billion U.S. dollars.
In the United States, Starbucks is not the biggest fish among other restaurant brands in
terms of advertising. In 2020 it ranked at number 9, with 77 million dollars in measured
media spending. Ahead of Starbucks was its closest competitor, Dunkin’ Donuts, with
125 million in ad spend. In contrast to media spending, Starbucks is ahead of Dunkin’
Donuts when it comes to ground coffee sales in the United States. In 2020 Starbucks
earned nearly 200 million dollars more than its competitor in this regard and ranked
second among other coffee brands. The coffee chain also enjoys a healthy score on the
American customer satisfaction index. However, this was not the case in 2015 when
satisfaction levels dropped significantly, and the company had to address customer
issues with the brand’s menu. Since then Starbucks has returned to customers’ good
graces, which undoubtedly led to its strong position among other restaurants.

CONCLUSION

Starbucks sells not only its coffee; it sells the “Starbucks’ experience”. The company is
successful to convey its vision to the customers. It can convince customers paying more
for high-quality products and a new life style. The goal of Starbucks is to establish and
leverage its powerhouse premium brand through rapid expansion of retail operations,
introduction of new products and store concepts, as well as development of new
distribution channels.

Starbucks uses different channels to distribute its products outside the company-
operated stores. These include arrangements with foodservice companies, licensed
partners, grocery channel, warehouse club accounts, direct-to-customer market
channels, joint ventures and other specialty operations. The deal with Kraft Foods
allows that Starbucks’ products are available on grocery shelves. Both companies
accomplished marketing and promotion activities, e.g. radio advertising campaign or
launching touch-screen marketing tools in supermarkets with info about specific bean
types and blends. That helps customers to understand about Starbucks experience and
shows them how they can bring that experience home. Beside the cooperation with
Kraft Foods to sell its coffee products in supermarkets, Starbucks delivers whole bean
and ground coffees to office coffee distributors, institutional foodservice companies,
hotels, airlines, retailers and restaurants. In 2001, the company had already 5,500
foodservice accounts which brought Starbucks 31 % of its specialty revenues.
Additionally, the distribution to warehouse club chains ensured the company 13 % of
specialty revenues.
The Starbucks’ main marketing strategy is to represent its store as a “third place”
between work and home. People can take a refreshing break and relax by drinking a
cup of fresh-brewed coffee in a homelike and socialized environment. They enjoy the
life in a coffee store with warm wall colors, soft and cuddly armchair, coffee flavor,
convenient music in the background and friendly baristas. Each week, 44 million
customers visit a Starbucks coffeehouse, 10 % of them twice a day. A typical Starbucks
customer comes to favorite store 18 times a month. But how can Starbucks reach these
loyal customers outside the stores, namely in their “first place” (home) or “second place”
(work)? The solution is that regular customers would continue enjoying their favorite
Starbucks coffee if they could buy and brew itself. Thus, the sale of coffee beans in
grocery market for home brewing can continue building the relationship with the
customer outside the stores. That helps Starbucks being within the sphere of customers
whenever they have a need for a cup of coffee, said Lopez, the Starbucks’ senior vice
president and head of global consumer products. With ensuring the quality of products
sold at grocery markets, Starbucks can continue expanding its reach to new and
existing customers without diluting the premium brand.