Starbucks

Acknowledgement

I would like to express my special thanks of gratitude to my Marketing lecturer who gave
me the golden opportunity to do this wonderful project on the topic Starbucks which also
helped me in doing a lot of Research and i came to know about so many new things I am
really thankful to them.
Secondly i would also like to thank my parents and friends who helped me a lot in
finalizing this project within the limited time frame.
TABLE OF CONTENT

1. Figures………………………………………… 4-7
2. Executive summary………………………….. 8
3. Introduction………………………………….. 8
4. Company overview…………………...……… 8
5. Market overview……………………...……… 8
6. Segmentation………………………………… 9
7. Marketing mix (7ps)…………………………. 9
7.1 Product……………………………………... 9
7.2 Price………………………………………… 9
7.3 Promotion………………………………….. 10
7.4 Place……………………………………….. 10
7.5 People……………………………………… 10
7.6 Processes…………………………………… 11
7.7 Physical evidence…………………..……… 11
9. Critical success factors………………………. 12
10. Conclusion……………………………………. 14
11. References……………………………………. 15-16

Figures
Figure 3
Figure 5

Howard Schultz (Starbucks CEO)

Figure 6
Figure 7

Figure 8
EXECUTIVE SUMMARY

Starbucks is North America's leading roaster and retailer for coffees, within the past
years the coffeehouse has become a familiar feature of American life. The Company's
objective is to launch Starbucks as the most recognized and respected brand of coffee in the
world and it`s having various business operations and products under its umbrella.
Starbucks has 24000 stores in 70 countries. Starbucks has CEO Howard Schultz who has
done many changes and improvements in business. He has permitted Hillary Clinton for
president.
  In this essay I hope to discuss about Starbucks Segmentations and their targeting for
products and services. critical success factors (CSF) on understanding the relationship
with the present marketing mix the 7p’s.Furthermore justification for the decision making
of the basics of marketing mix how these factors can be change in critically identified
sectors.

INDRODUCTION

The purpose of this assignment is to categorize the Starbucks CSF and here will be discuss
solutions for that. We hope to find what are the segmentations are used by Starbucks. How
Starbucks became the most popular coffee house in world using marketing mix. In this
essay will clearly identify Starbucks position in market and their target market segments
with their current situation and future improvement what can do for their growth.

COMPANY OVERVIEW

Starbucks first established in the year of 1971.It have three partners who are English
teacher Jerry Baldwin, history teacher Zev Siege, and writer Gordon Bowker had enlarged
their first store named as Starbucks Coffee (Gregory, 2015).Starbucks is started to sell the
high-quality coffee beans and equipment. After few years, Starbucks could be a successful
coffeehouse company with needful business activities in products and services,
management style and marketing strategy. (Figure1 and Figure2) According to Gregory,
(2015) “their mission is to inspire and nurture the human spirit – one person, one cup, and
one neighborhood at a time.”

MARKET OVERVIEW

Starbucks is the largest coffeehouses within the coffee market. Starbucks is a single coffee
shop that does not has a single direct competitor. Its closest competitor is Caribou coffee
house with less than 5% number of stores as compared to more than 11,000 stores of
Starbucks situated in United States. Starbucks hold a leading position within coffeehouse
market.(Figure 3) Starbucks nominated as one of the largest coffee houses all over the
world. It has almost 21,000 stores located in 61 countries all over the world (Corporation,
2016). (Figure 4) Starbucks has so many stores in the all over the world 14,000 stores in
United States,750 in China, 300 in Taiwan, 350 in Mexico & 170 in Thailand 1,300 in
Canada, 1,000 in Japan, 500 in South Korea, 800 in United Kingdom (Starbucks Corporation,
2012).

MARKET SEGMENTATION

Peter Drucker said that “The purpose of business is to create customers”, (Marsh,2012).
Starbucks use Demographic segmentation by using family life cycle, age, gender, income,
ethic and background.
Initially Starbucks was based as a demographic segmentation base in consumer Markets as
it has concentrated on social class particularly the business class people those who are
working at the office and wanted to have a cup of coffee with a good atmosphere. Because
picking up a coffee on the way to work is a growing trend in the noble countries. They
supply Wi-Fi and newspapers in the stores to promotions the professionals to use
Starbucks as a second office. Rivero(2015) states that “Starbucks main target market is men
and women who are between the age of 25-44 which means almost half 49% of its total
business. Young adults it means 18-24 aged are the next large group that starbucks targets.
They get about 40% of starbuck`s sales”.
In geographically they have segmented their Markets by area of a country or the world,
Market size, Market population density or climate for the example Starbucks is located all
around, specifically in upper class locations near offices and near many colleges and
campuses.

MARKETING MIX 7P`S

Product
 Starbucks is focusing at high standards, introduction of new products and providing
outstanding service with unforgettable experience. They always try to introducing new
products, for the example "VIA flavored coffees" (Erin V, 2010), and they find customer
specific needs for that only they have been introduce nonfat milk. They also offer
customers different products from time to time such as Frappuccino, strawberry cream in
summers and different lattes such as gingerbread latte in Christmas. (News, Starbucks
web,2012).

Price
Commonly price and quality says the value of the product and services. Starbucks is buying
quality beans. Starbucks increased their beverage prices in U.S. Starbucks included value
added services for example to  breakfast pairings for $3.95 in other branches (Ciura,
2015).Starbucks coffee products are more costly than most competing products, such as
McDonald’s Premium Roast. Customers who would not have imagined of spending more
than 50 cents for a cup of coffee in past but now gladly pay $3 to $5 for their cappuccino,
mocha latte or vanilla ice blended drink (Alto, 1996) .

Promotion

Starbucks introduced Starbucks Cards and targeting their valued customers to promote
their products. When customers are buying a gift card, it also arrange for free advertising,
inviting new customers (Corporation, 2016) . They not spend a lot of money on advertising.
but their competitors spend lot of money for advertising 2007 McDonalds spent around
727.7 million dollars but Starbucks only have spent 16.6 million dollars for their
advertising (Autopsy, 2007).Now a days 34 million people pay attention to Starbucks on
Facebook. (Figure5)

Place
Starbucks have a direct and personal relationship with its consumers so have direct supply
chain from the producers to the consumers. They have Cafes, online store, Starbucks App,
Retailers. These are the main places used for the distribution of products. In this activities
show how they adapt to changing times, technologies and market situations.  (Greenspan,
2015)
People

Keeping employee satisfaction high is the key to providing a superior customer experience.
Starbucks keeps its employees satisfied with reasonable salaries, health benefits and
standard opportunities. The Starbucks employee training provides valuable programs for
employees. They had created three leadership training programs focused on management
styles and methods that line up with their exclusive culture. This year, the company will
start giving in US employees interest-free loans to help pay the exorbitant up-front
apartment-rental fees common in many cities there(Ripley, 2016).

Processes

Starbucks are able to keep its outstanding taste and service. Though employees target to
serve customers as quickly as possible, it is not always achieved. Also, employees are not
always able to keep up with the cleaning as there are often dirty cups on the tables.
Sometimes they provide self-services. Starbucks had coffees available for direct order
online, in supermarkets. These products give consumers a chance to have the “Starbucks’
experience” at home. (Schultz, 2011)

Physical Evidence
Starbucks has ambient lighting; nice music along with good seating arrangement and this
also serves good coffees. The choice of furniture and fixtures, the names of its drinks, the
messages on the cups, the graphics, it's all been thoughtfully made. Starbucks have best at
wrapping its product. As many customers come to the store to work on their laptops, a
number of plugs is provided as well as free and easy access to Wi-Fi, which has come to be
likely in coffee shops and invites people (O’Farrell, 2016) .
Critical Success Factors

The CSF of Starbucks is can be identified by applying SWOT analytics.  CSF`S are different to
each organization, and will reflect the present business and future goals.

CSF 01
Product quality - Starbucks provides best coffee which the prices are quite high comparing
with other products; however it has good environmental concerns, partners, facilities and a
good image.

CSF 02
Service provided to customers - First, Starbucks should increase its focus on the quality of
customer services. Management should consider about services with their competitors
services.

CSF 03
Social responsibility - Starbucks don`t care more about social responsility.so customer feel
bad when have coffee in Starbucks.

CSF 04 – Customer loyalty reward programs-Its marketing objective should be focused on

creating new markets and, if necessary, new products or product line to provide
accommodations new customers.

Recommendation of change in the marketing mix

Product - new products or product line to provide places for new customers. Starbucks
may create new products that will have a request to the lower segment of the market.

Price- Nowadays not only Starbucks has provided those things but also there are
competitors providing all facilities the same such as Mc Donald and Dunkin Donut. Because
both of them provide cheap prices of coffee which everybody can reach them and they have
the best price strategy to attract customers. Especially today the way of human life has
changed and most people have to hurry for cheaper things. This is a part that Starbucks can
improve upon. Because there is a trend that some customers will change to drink others
brands which are cheaper.

Promotion - Starbucks can provide some price promotion to motivate their customers.
Therefore, while Starbucks does not have discount policy this point shows for flexibility in
business strategy and also they can spend more money for their advertising. (Ripley, 2016).

Place- Starbucks can make place arrangement for parties such as wild and loud, family-
friendly, business, quiet, and romantic and playroom for children.

People – Customer, employees are important people in Starbucks. Starbucks will get good
image if they improving this factor. They can create an atmosphere of growth by providing
training and celebrating activities for employees. Workers must need encourage for taking
risks and learning new skills. Starbucks can make small ways to surprise employees. For
example, Starbucks can occasionally bring in a special treats for their employees.

Process - Starbucks sells 4 billion paper cups annually, and most of them are never
recycled. They can make arrangement to recycle their cups and plastic items. (Hayley, 2015)
It will create brand image for them.

Physical evidence -This is the space by which you are bounded when you consume a
product or service The customers in Starbucks will play a big part in setting the
atmosphere of their place.

In my first submission my starting also wrong it means my executive summary and the
introduction I only had described about Starbucks Company without describing essay. I
only used not have mentioned enough detail about marketing mix, because I only have
defined 4ps which are Price, Product, Promotion and Place and how these things were in
Starbucks process. But in my new assignment I have add People, Process and Physical
Evidence. Furthermore I have included example. I didn’t connect marketing mix theories
with Starbucks correctly in my first assignment. But in this submission I have critically
analyses in marketing mix in Starbucks. I clearly discussed about marketing mix with real-
time Starbucks performance. At my first essay I have mentioned marketing mix without
using theories which in lecture notes and my definition also was wrong. But this time I used
to learn textbooks and books which are about Marketing mix and Starbucks in library. So I
used marketing mix theories with correct references. My recommendations of changes in
the marketing mix in Starbucks were impossible to active because Starbucks has their
branches in every country and my examples were wrongs which I mentioned in my first
assignment. But in this assignment I have include possible recommendations of changes in
the marketing mix in Starbucks. I have discussed overview of Starbucks and its prioritized
CSFs more than my previous assignment. I have collected information from books and
journal articles which are wrote in previous 5 years. But I have only got information s in
webpages in my previous assignment and my citations were wrong in that time, because I
didn`t use Harvard references but this time used Harvard references I got help from
module leader.

Conclusion

The purpose of the essay was to discuss about Starbucks segmentations and how to
overcome in CSF with 7ps.Starbucks became successful coffee shop in the market. Branding
is one Starbucks corporate strategies. They aim to provide their customers with more than
just a cup of coffee. Starbucks has continued to grow since the day is has been established,
highlighting and emphasizing its management decisions. Many people all over the world go
into Starbucks for their cup of coffee every day.

References
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[Accessed 29 October 2016].

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October 2016].

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 http://www.starbucks.com/about-us/company-information/online-policies/web-
accessibility [Accessed 29 October 2016].

Greenspan, R. (2015) Starbucks coffee’s marketing mix (4Ps) analysis - Panmore institute.
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How can Starbucks improve customer satisfaction? (n.d.). Available from:

https://www.quora.com/How-can-Starbucks-improve-customer-satisfaction [Accessed 29
October 2016].

O’Farrell, R. (2016) Who is Starbucks’ target audience? Small Business Chron [Accessed 29
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Peterson, H. (2015) Why Starbucks doesn’t recycle most of its cups. Business Insider. 30 May.
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Starbucks Coffee (2010). Your perfect Starbucks Latte. YouTube. 04 May. Available from:
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