Introduction: Starbucks Corporation is an international coffeehouse chain based in Seattle, Washington, United States in 1971. It is the largest coffeehouse company in the world, with 17,000 stores in 55 countries. Starbucks sells drip-brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks and items such as mugs and coffee beans in its outlets and even grocery stores. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Starbucks’ Italian style coffee, espresso beverages, teas, pastries and confections have made it one of the greatest retailing stories of history and world’s biggest specialty coffee chain. The long term goals and objectives for Starbucks are the ethical sourcing of coffee and farmer support, community involvement, recycling used products, reducing energy plus water consumption, employee motivation and promotion of community services.
SWOT analysis is a method that is used to evaluate the strength, weakness, opportunities and threats involved in the company’s business. When we evaluate Starbucks with this, we find the following:
Strengths: The Corporation is very profitable organization with a strong network. It is a global coffee brand built upon a reputation for fine products and services. It has strong ethical values which are depicted in its ethical mission statement. The organization has strong economic base along with effective advertising campaign and generated revenues of more than $5000 million in 2004.
Weaknesses: Starbucks has a reputation of new products development and creativity. However, they may remain vulnerable to the possibility that their innovation may falter over time. Since, they have strong presence in USA with their huge number of cafes located in home market; they need to look for expanding in other countries, in order to spread business risk. The organization is dependent on the main competitive advantage, the retail of coffee. This can make them slow to diversify into other sectors if any need arises.
Opportunities: Move plants to Mexico and other foreign nations to keep the production costs low. Adapt its policies and products to the changing needs. Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have the potential. Expand its global operations, by exploring the new markets like India and other Asian, and maintain its position. Starbucks has been good at taking advantage of opportunities as offering reloadable value cards and CD-burning service.
Threats: Starbucks is exposed to the rise in the cost of coffee and dairy products. Its success has led to the entry of many competitors and copycat brands that pose as a potential threat. Pricing can also be affected, with rising competition. The organization is maturing, so it needs to change.
Product Differentiation: Marketing Mix is an effective tool to use in product differentiation. It is a unique blend of product, place (distribution), promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market.
Product Strategy: The product includes not only the physical unit but also its package, warranty, after-sale service, brand name, company image, value and many other factors. Starbucks puts a lot of emphasis in its products and tries to position it as “third place” in people’s lives after work and home.
Place Strategy: Starbucks is concerned with making products available when and where customers want them. It is an international coffee house chain with more than 17,000 stores in 55 countries.
Pricing Strategy: This is the most flexible part of the marketing mix, and it varies from medium to high in case of Starbucks.
Promotion Strategy: Through its advertising, the company provides persuasive and informative ads that talk about new flavours, satisfaction for customers and location of outlets. It is also involved in sales initiatives such as coupon distributions, community relationships and direct marketing on Facebook, twitter, Pinterest and Instagram.
Along with its team, Starbucks’ success expanded to greater heights. It created a business out of human connections, community involvement, partnership connections, public responsibilities and comfortable sitting areas. All those factors including its background and history contributed in creating Starbucks’ amazing success in the business world
Segmentation of Markets: Marketers use Segmentation Bases, or Variables, which are characteristics of individuals, groups, or organizations, to divide the total market into segments. The choice of segmentation is crucial because inappropriate segmentation strategy may lead to loss of sales and missed opportunities. In case of Starbucks, the markets are segmented based on geography, age, ethnicity, marital status, personalities, motives, lifestyles, benefits sought and usage rate.
Promotional strategy: It is a plan for the optimal use of the promotional elements; which is the combination of promotional tools - including advertising, public relations, personal selling, and sales promotion – used to reach the target market and fulfil the organization’s overall goals. Competitive Advantage is one or more unique aspects of an organization that the cause consumers to patronize a company rather than its competitors. Starbucks Café is one of those companies that do not follow an aggressive advertisement strategy. Today, the coffee company mostly promotes itself through their logo and cups that have a high recognition value all around the world. It uses in-store advertising for its products and uses radio, television and newspapers as effective (old) advertising tool. It also has a website and a smartphone application. It also engages in PR activities. Starbucks has had great success in its Social Media campaign because it has super influencers; it encourages sharing, it creates experience, its causes are timely and consistent and it also cross-promotes.
Sales promotion activities of Starbucks includes discounts , giving away free coffee samples and organising ‘happy hours’ where a specific drink is offered at half at its price. It uses different deals in different regions. If we talk of personal selling, the staffs at Starbucks are not only well trained in providing advice and information about the products, but they also know how to build an intimate relationship with the customer in an individual way.
Conclusion: Starbucks Café is an honest brand and having personal connection while being able to provide customers with high quality coffee and a comfortable space to them to enjoy it in had become a reality. Along with its population, Starbucks’ success has expanded in a big way. It created a business out of human connections, community involvement, partnership connections, public responsibilities and comfortable sitting areas. All those factors including its background and history contributed in creating Starbucks’ amazing success story.
References
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Hartman,D.(2014, Feb.10) What is strategic capability? Retrieved from http://smallbusiness.chron.com/strategic-capability-15828.html
Starbucks. (2014, Feb.11). Being a responsible company. Retrieved fromhttp://www.starbucks.com/responsibility
