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The company tried breakfast food with little success, and failed at branching out into music as well. Overall, there is little evidence that Starbucks can be anything other than a coffee company.
Despite the weaknesses, there are a number of great opportunities in the market. The best is the opportunity that Starbucks is already pursuing in emerging markets. There is a strong focus on Asia and the Middle East. The company is weaker in Europe, has a small presence in large markets like Brazil, and is a non-factor in other emerging markets like South Africa. Thus, there is a lot of room for growth internationally.
Another opportunity that has presented itself is for Starbucks to apply its operational excellence to other businesses. Starbucks isn't a success because it brews the world's best coffee, it succeeds because it runs its stores very effectively. This is something that it hopes to apply to other businesses, and to this point the jury is out. However, there is the possibility that other opportunities will emerge in quick service especially that the company can take advantage of.
Beyond these opportunities Starbucks can also set strategy to eliminate any threats that it might. These threats could include the state of the economy. Starbucks is a premium product, something that means that people will trade own in times of economic uncertainty. Whether the company has insulated itself against downturn is not known at this time. There are other threats as well. Around the world, there are many coffee chains that emulate the Starbucks model. Should nay emerge as either a superior performer or with branding superiority, then Starbucks could find it difficult to maintain market share.
Another threat is somewhat more existential in nature, relating to the supply of coffee beans as the result of global warming. Coffee is grown in relatively sensitive bioregions, close to the equator and are subject to pests and erosion issues in addition to climate change. Starbucks has responded in part to this threat already, becoming a major lobbying entity for action to curb climate change (Starbucks, 2013). The best case scenario has 2/3 of suitable coffee-growing habitat unable to support the plant in the future, hence the urgency of action for Starbucks (Fiegl, 2012).
Overall, the company has a lot of opportunity around that world and that outweighs any pessimism about the business that might come from such analysis. Starbucks is well-positioned to manage problems that might arise, especially if it is flush with cash from successful launches in high-growth foreign locations.
A strong marketing plan has clear-cut objectives that can lead the company to take specific actions. For Starbucks, there are two focal points to the marketing plan -- each of the most important markets. In the United States, the company is focused on defending market share and improving same store sales. Brand recognition is not particularly important -- it's a household name. It is important that the objectives are operationalized. In this case, defending market share is just that -- the company is aware of its share of the U.S. coffee retail market, and needs to ensure that its share does not fall beyond that point. Because the coffee retail market is highly-fragmented, Starbucks can probably set an objective of growing market share by one or two points, since that share is likely there for the taking. The company can even focus on specific states or metro areas for its growth -- for example one or two large metros and one or two fast-growing metros. This is an efficient way of target marketing, by reducing the amount of money needed to achieve the objectives, by narrowing down the geographic target market for the marketing program
In China, the objectives are different. Starbucks is not a household name, and there is significant room for growth. The company should focus on building the brand recognition, as well as the market share. Operationally, market penetration is a key objective and the marketing plan should support that. Operationalized, there are generic objectives like market share and revenue, but for marketing specifically the brand recognition is important as is same store sales, which can serve as a proxy for brand loyalty as well as market acceptance of the service.
In the United States, the company has premium positioning for its brand that it supports with extensive marketing and with placement saturation. Starbucks does not need to change this approach much, as it has generally been successful and the changes to the objectives are incremental in nature. Operationalized in the context of the marketing mix, this means that Starbucks is going to continue to saturate key markets with stores. There are still areas that are growing -- new malls and shopping plazas or rejuvenated urban areas - and these areas are ideal for placement. New stores will help the company to attract new customers. Ideally, Starbucks will want to saturate great markets with additional stores in key areas -- perhaps within grocery stores or with kiosks. Such branch stores can increase presence in very high demand areas by tapping into unique traffic flows.
With respect to price, Starbucks continues to face price competition. The company prices at a premium and most other coffee companies see the Starbucks pricing as a benchmark, and try to stay in that range. This actually helps to alleviate pricing pressure on Starbucks as its brand can overcome similarly-priced products. Where companies seek to win share from Starbucks with cheaper coffee (McDonalds, Dunkin Donuts), the coffee is clearly inferior as is the in-store experience. Starbucks therefore has no significant reason to alter its pricing strategy as part of this new marketing initiative. There is little reason to Starbucks to change its product strategy either, since the company's products have generally been successful. It should maintain its national strategy on product development, introducing new products at the national level and then supporting them. However, there are no major new product initiatives required at this time. In the long-run, the company may wish to investigate brand crossover by using some of its juices, teas or baked goods to enhance the offerings in the flagship Starbucks stores.
Promotion is the key to the U.S. marketing strategy. Starbucks typically engages in extensive promotion, using conventional media, social media and deals to entice consumers. There are often promotions for popular seasonal products as well as new products. With this plan, Starbucks should increase its promotional budget slightly in order to provide additional support for the geographic areas that have been targeted for growth. The company's key metros strategy will be supported with additional print support especially, as well as social media support. Greater brand visibility will tie in with more stores to fuel growth. The promotional message will reinforce the desire for Starbucks' products in the customers by selling the product attributes. The messages can even be timed -- for example timing social media activity for the afternoon to spur greater sales during the afternoon coffee rush.
In China, the strategy needs to be different because of differences in the market and in the objectives of the company. With respect to placement, store growth is a crucial element. The company has been buying back flagship stores in China (No author, 2013). The company therefore has more control over its stores. It should also increase the number of stores. Population densities are high in China, even in wealthy areas, and this creates opportunity for high stores densities. Further, there are entire major cities that do not yet have a Starbucks. Even in cities with many, like Beijing, there are significant gaps in the coverage. Building stores is a key element of the China marketing plan.
Price is an interesting component of the China marketing plan. Starbucks tends to have pricing that is roughly the same in every country. This is the case even in China, where it clearly targets a mix of ex-pats and relatively wealthy Chinese. The country's middle class is growing, so the number of people who can afford Starbucks is also growing. What this means for the company is that it can maintain its current pricing strategy. This strategy supports the brand image, and the premium positioning of the company in the Chinese market.
Promotion is a key element of the Chinese marketing plan. The Chinese market is somewhat different than Western markets, in that brand is not as important and that there is greater evidence on social media for communication and promotion. Thus, Starbucks needs first to introduce the concept of the brand, and the idea of the brand promise to the Chinese consumer. This is something that other firms are also trying to do in that market, so it needs to be part of the approach that the company takes. Further, the company needs to focus its promotional efforts on in-store promotions to reward customers for their visit, and on social media. The company needs…[continue]
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