Every organization works with a plan, which defines where they want to be and how they intend to get to that point or status. The same applies for Starbucks, an international coffeehouse that applies the strategy for growth and development. The 5 P`s strategy involves pattern, position, perspective plan and ploy. Starbucks began its operations in 1971 in 50 American states and 43 counties across the globe. Through the growth process, the firm has won several awards such as the “Most Admired Company” and “100 Best Corporate Citizens (Husain, Khan, & Mirza, 2014).” The awards issued in different periods indicate the prowess exhibited by Starbucks to compete in the coffee market.
It had not been an all up for Starbucks as witnessed in 2008 when the clients reacted to the economic slowdown and opted to purchase cheaper coffee. Coffee in this case being a daily-consumed beverage, the decision by clients to select cheaper coffee appears to have negatively affected the organization. Consequently, the decisions made by clients led to the closure of over 300 stores and the termination of job contracts for over 6,700 employees. The firm aimed at maintaining lower operating costs and maximizing on profits. Therefore, the firm would not sustain the employees in the poorly performing stores (Husain, Khan, & Mirza, 2014). The meltdown was a reason for brainstorming which led to some changes within the leadership and management. The new CEO, Howard D. Schultz immediately identified that the economic slowdown was not the only factor that had led to the massive closure of stores. Another factor was the multiple coffee shops that Starbucks had opened. These shops did not bear the initial concept of a Starbuck shop. The new focus was to reignite the emotional attachment with the customers.
Among the steps taken by Starbucks to restore its image, include aligning the business objectives with social media. The approach allowed customers to design their desired drinks and order for the drinks from Starbucks. The approach created an interactive customer experience which had not been witnessed in other firms. For the brand which was declining, a new social media experience brought back the zeal at Starbucks which contributed significantly to the increase in revenues and attraction of more clients (Husain, Khan, & Mirza, 2014). A similar IT project, known as “My Starbucks idea” that allowed individuals to formulate their desired Starbucks products for the market was adopted. Additionally, Starbucks made the clients own the products as they participated in the product development thus had an identity in the product.
The aspect of social co-creation enabled Starbucks to create a new value in the organization and the products. The increase in social interactions using technology enabled Starbucks to introduce co-creation. Although “My Starbucks Idea” as a project did many good for the organization, the management soon realized that the idea did not amount to much. The social creation idea replaced the initial “My Starbucks Idea” (Husain, Khan, & Mirza, 2014). Additionally, teaming up with Mutopo to offer a social co-creation platform for the development of new Starbucks products was a brilliant solution to the restoration of productivity. The platform enabled the company to capture the new ideas and votes from the customers on different ideas. In this regard, the strategy presented a sustainable plan for value creation. The case study indicates the possibility of changing the success of the company by changing the customer approach. In this perspective, the firm had now more employees and opened more stores as before.
In defense of Starbucks, the strategy implemented in their case involved only two of the five P`s in strategic management. The two P`s include plan and ploy. These two aspects of strategic management provided Starbucks with the much-needed prowess to re-enter the market with vigor and strength.
In a strategy as a plan, a corporation indicates their intended course of action. The intended action plan operates as a guideline on dealing with a specific situation that affects the organization in one perspective or another (Hill, & Jones, 2013). The plan must have two essential traits. First, the plan should be developed prior to the actions to which it applies. Secondly, the plan must be formulated purposefully and consciously. From the perspective of Starbucks, the firm created a plan to reinitiate the customer experience. A problem that had been identified was loss of touch with the customers, which had led to the loss of customers and massive closure of the coffee shops. Furthermore, the plans within Starbucks strategy had a specific purpose, which focused towards not only gaining more customers, but also reinitiating the contact with the previous customers. In this perspective, the guideline to implementing the plan involved introducing aspects that would bring new customer experiences into play. The management team also developed the plan consciously after the realization that the economic situation had caused significant damage to the firm’s performance.
The ploy was another aspect of the strategic management that Starbucks brought into play. Similar to a plan, a ploy can work as a strategy with the sole aim of maneuvering and outwitting the competitors (Hitt, & Ireland, 2007). In this regard, the introduction of new approaches in incorporating social media to the firm’s activities is one such tact that works as a ploy in the strategic management plan. The firm introduced a new concept, which had not been witnessed or exploited by other firms within the market. The concept allowed the clients to participate in the creation of customized coffee products and request for these products. The ploy worked in hand with a plan on how to reignite the customer experience. Evidently, the new approach worked for the firm because new and former clients were excited in developing the new products. The involvement of clients in new product development also enabled the customers to own the brand as they participated in its creation. Other firms in the coffee industry had not pitched such a move in their customer interactions. The new move enabled the firm to attract more clients.
Additionally, the approach providing a platform for client interactions also appeared as a ploy initiated by Starbucks to retain the clients. In this regard, the firm allowed the consumers not only to design customized coffee products but also to engage in voting and discussions about the new products. Therefore, the approach empowers the customers to participate and make decisions regarding the product ideas by Starbucks. The ploy works for the firm because; the firm identifies the probable market performance of the product prior to introducing it to the market (Freeman, 2010).
Starbucks used both plan and ploy as key components within its strategic plan. The combination of the two P`s in strategic marketing helped the firm to overcome the slowdown and shortcomings that had brought it down.
References
Freeman, R. E. (2010). Strategic management: a stakeholder approach. Cambridge [u.a.: Cambridge Univ. Press.
Husain, S., Khan, F., & Mirza, W. (2014). Brewing Innovation. London Business School, 1(1), 1-4.
Hitt, M. A., & Ireland, R. D. (2007). Management of strategy: concepts and cases. ([New ed.], International student ed.). Australia: Thomson South-Western.
Hill, C. W., & Jones, G. R. (2013). Strategic management: an integrated approach (10th ed.). Mason, OH: South-Western, Cengage Learning.
