Starbucks Marketing Analysis Along the Research Proposal
- Length: 20 pages
- Sources: 4
- Subject: Business
- Type: Research Proposal
- Paper: #89830333
Excerpt from Research Proposal :
The analysis of the climate in which an organization activates is also known as the PEST analysis.
Starbucks offers a wide selection of coffee-based beverages, with both caffeine and without caffeine. Aside their coffee beverages, they also offer whole-bean coffees, food items and coffee-related products and hardware equipment. "Starbucks stores offered a choice of regular or decaffeinated coffee beverages, a special "coffee of the day," and a broad selection of Italian-style espresso drinks. In addition, customers could choose from a wide selection of fresh-roasted whole-bean coffees (which could be ground on the premises and carried home in distinctive packages), a selection of fresh pastries and other food items, sodas, juices, teas, and coffee-related hardware and equipment."
About 61% of the sold items are coffee-based beverages, 15% are whole-bean coffees, 16% are food items and 8% are products and equipments related to coffee. These percentages vary within each Starbucks store according to the location, the customers' preferences or the actual size of the store. Smaller stores sell mainly coffee beverages with a reduced selection of whole-bean coffees and also limited hardware appliances. The larger stores on the other hand, sell a wide variety of coffee-based beverages, whole-bean coffees, "gourmet food items, teas, coffee mugs, coffee grinders, coffee-making equipment, filters, storage containers, and other accessories." Starbucks had also launched the Hear Music service, but it was renounced this year.
Image on the market
Starbucks has generally been perceived as the undisputed leader of the international coffee industry. In their beginnings however, skeptics stated that the company would never be able to convince the American individual to consume its coffee on the street or in stores. The company however managed to successfully achieve its desiderate and establish itself as the global center of the coffee industry. Its successful image was created, enforced and maintained by the corporate strong brand, a symbol recognized across the globe. It was also improved by their policies relative to the environment, the customers, the shareholders and most importantly, the staff members.
After nearly four decades of continuous success however, the company is now encountering some difficulties, generally materialized in decreased customers in the United States stores. Tormented by internal and external problems, the company's stock plunged by nearly 50% throughout fiscal year ended on the 31st of December, 2007. The same year also brought about the first decrease in sales registered in Starbucks' entire existence. CEO, President and Chairman Howard Schultz however was not intimidated by the negative perception and he created a plan that would restore Starbucks' image as "both a corporate powerhouse and a cultural icon epitomising the caffeine-fuelled lifestyle of the globalised 21st-century world."
Technology and Experience
The coffee giant has been present in the national and international markets for almost 40 years; therefore their expertise is quite vast. Foremost, they hire only the most skilled, qualified and experiences professional to join their teams; the previous expertise of these people adds more value to the Starbucks chain. Finally, the most important source of experience in the field comes from the CEO himself, who has been with the company since its early and shy beginnings and who is highly experienced and capable to successfully handle any occurred situation.
In their quest to integrate innovation and ensure success, the technological developments have played a vital role for the strategic approaches implemented by the senior at Starbucks. A relevant example of how technology was combined with coffee selling is the joint venture of Microsoft and Starbucks in 2001, when the two agreed to offer wireless high speed internet connections to the customers in the Starbucks stores. The company also invested large sums of money into acquiring new hardware and software equipments that increased the operational and cost efficiencies, to finally culminate with increased satisfaction to the customers, the staff members and the shareholders.
As mentioned above, the coffee giant has entered a mutual agreement with it international leader Microsoft. This lead to the offering of WI-FI connections to the customers in the Starbucks stores and it as such increased both the satisfaction felt by the consumers, but also the numbers of customers, leading consequently to increased revenues. Another collaborator in the technological department is at&T, which has supported and developed communication appliances at point of sale. In the spring of 2008, the partners signed a new agreement for further improvement. HP is yet another major collaborator on the technological side and they offered support in Starbucks' launching of their music service. Apple also joined forces to support the Starbucks Hear Music program; the partnership allowed customers to purchase iTunes from the Starbucks Music Store.
Other ventures were launched with the purpose of further diversifying the product palette. In 1994 for instance, Starbucks signed a partnership with PepsiCo to produce and distribute cold coffee-based beverages. The following year, they entered a venture with ice cream producer Dreyer Grand Ice Cream to produce coffee flavored ice creams under the Starbucks brand. Dreyer and Starbucks' ice cream became the best sold coffee flavored ice cream in the entire sector.
To ensure they were able to sell the best quality coffee, the seniors at Starbucks delegated managers to travel to coffee producing countries and set the basis for partnerships with coffee exporters. "Dave Olsen, Starbucks' senior vice president for coffee, personally spearheaded Starbucks' efforts to secure top-notch coffee beans to supply the company's growing needs. He traveled regularly to coffee-producing countries -- Colombia, Sumatra, Yemen, Antigua, Indonesia, Guatemala, New Guinea, Costa Rica, Sulawesi, Papua New Guinea, Kenya, Ethiopia, Java -- building relationships with growers and exporters, checking on agricultural conditions and crop yields, and searching out varieties and sources that would meet Starbucks' exacting standards of quality and flavour."
However they are highly distinguished from the rest of Starbucks' collaborators, the corporate employees play a vital role for the overall success of the organization. They are generally called partners and are highly valued within the entity (the hourly workers within the retail stores are called baristas). The staff members are offered various incentives and training programs and in return, they are expected to increase their performances and serve the customers at high standards of quality. In 2006, the total number of Starbucks partners was of 60,000, out of which 50,000 were employed in North America.
Starbucks has not become limited to only targeting one particular group as this could have reduced their revenues. However their products were initially addressed to the adult population, consuming coffee for energizing reasons, today, the Starbucks' products apply to all age categories. A study conducted by a social network website in a series of Starbucks stores revealed that "the demographic range of people who walked in was very wide, ranging from teenaged, high school kids to old senior citizens."
The Starbucks officials placed an increased emphasis on socializing with their customers and getting to know them better. As such, large parts of the training programs offered to staff members taught the employees how to interact and bond with the customers. "By extensively training employees for twenty hours before full employment, Starbucks hopes to maximize employee responsibility and attentiveness, resulting in a decrease in wait time. Furthermore, by closely tracking consumer needs and wants, Starbucks is able to introduce more popular products with a decrease in time between new product introductions. By decreasing wait time and increasing choices for customers, Starbucks hopes to increase loyalty among current customers and hopefully attract new customers."
In late 1990s, the average number of Starbucks customers was of 5 million. Most of these people had become loyal customers, which spent an average of 15-20 minutes per month within the Starbucks stores and spent a monthly average of $50. There were also the "fanatic" ones, who came in daily. "Christine Nagy, a field director for Oracle Corporation in Palo Alto, California, told a Wall Street Journal reporter, "For me, it's a daily necessity or I start getting withdrawals." Her standard order was a custom drink: a decaf grande nonfat no-whip no-foam extra-cocoa mocha; when the baristas saw her come through the door, she told the reporter, "They just [said,] 'We need a Christine here.'"
The contemporaneous Starbucks' customers has suffered sever changes from the past customer. In this order of ideas, the large majority of customers used to be formed from white women, aged between 24 and 44, highly educated, occupying highly paid and influential white-collar positions. In the present however, several Starbucks stores serve predominantly Hispanics or Cuban-Americans. Also, as a general tendency, the average Starbucks consumer tends to be younger and less well-educated.
The Starbucks customer is driven by a variety of forces. Some consume the coffee-based beverages out of a need to become fresh and energetic. Others simply enjoy the taste. Even the people who do not consume caffeine can enjoy a Starbucks treat as they offer a wide variety of…