The purpose of this paper is to apply the principles of Marketing Research process by conducting secondary research for a real life organization and proposing primary research which can be done in the light of secondary research. The first section of the paper presents an analysis of Starbucks using SWOT, 5Cs Analysis, and five forces model. The second section proposes primary research to solve a specific marketing problem.
Situation Analysis for Starbucks
Situation Analysis gives a comprehensive overview of a firm's internal and external environment by analyzing its strengths, weaknesses, opportunities, threats, competitive environment, customer profile, collaborators, and overall business climate (Kotler, Brown, Burton, Deans, & Armstrong, 2010). This section explains the situational analysis for Starbucks using 5Cs Analysis (Company, Customers, Collaborators, Competitors, and Climate), SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), and Michael Porter's Five Forces Model (Existing rivals, new entrants, substitutes, bargaining power of suppliers, and bargaining power of customers).
1. 5Cs Analysis for Starbucks:
i. Company Profile:
Starbucks is the world's largest coffeehouse chain. It is an American multinational corporation having more than 20,000 stores in 61 countries. Headquartered in Seattle, Washington, Starbucks serves a large number of customers around the Globe with its highest quality hot and cold beverages (The New York Times, 2012). The main product offerings by Starbucks include whole-bean coffee, brewed coffee, instant coffee, chocolate beverages, blended beverages and shakes, bottled drinks, smoothies, petites, ice cream, and a variety of breakfast items, foods, and drink nutritious products (Starbucks, 2013). It also operates an entertainment division and music store. Starbucks is ranked among the most successful and competitive beverage brands in the world (Simon, 2009).
ii. Customer Profile:
Starbucks offers a huge variety of beverages, fast food and breakfast items, and nutritious products for every type of customers. Therefore, its target market consists of all age groups: children, teenagers, youngsters, adult, and old people (Starbucks Store, 2013). However, Starbucks charges a very high price for its coffee and beverage products which limits its target market to the upper income group and occasional purchases only. Starbucks has opened most of its stores in highly populated and developed areas which mainly target the urban citizens with well-off backgrounds or modern lifestyles (Starbucks, 2013).
The collaborators of Starbucks include suppliers, distributors, retailers, and business development firms. These collaborators are the direct stakeholders of Starbucks. Therefore, every new strategy which Starbucks pursues for the growth or promotion of its business affects the business operations of these collaborators. Among all these parties, suppliers are the most important collaborators for Starbucks because they supply the highest quality of raw material which is used in the manufacturing of world's top ranked coffee and other beverages (Starbucks, 2013).
Starbucks faces competition from both local and international coffee and food manufacturers (Patterson, Scott, & Uncles, 2010). At the Global level, the top rivals of Starbucks include Dunkin Donuts, McDonald's, Yum! Brands, KFC, Nestle, Panera Bread, BIGGBY Coffee, Black Canyon Coffee, 7-Eleven, etc. In addition to these large scale competitors, Starbucks also competes with numerous small local coffee and food brands. The competitive pressures are also the biggest threat for Starbucks' high sales volume and attractive profitability (Kurtz, MacKenzie, & Snow, 2010).
The business climate of Starbucks consists of some major environmental forces which have a direct impact on its operations, sales, profitability, and sustainability. The most important force for Starbucks is the economic environment in its target markets. Economic forces like inflation, income levels, unemployment levels, exchange rates fluctuations, and industry growth rate affect its costs of operations and the earning and consumption patterns of its target customers. The second most important forces are social, cultural, and demographical forces which are related to the lifestyles, taste, preferences, income and social classes, and other consumer attributes of the target market. Starbucks has to offer its foods and beverages by keeping in view these forces in order to avoid unwanted denigration or criticism by the local communities (Jolliffe, 2010). The political, governmental, and legal forces also require Starbucks to run its business operations and marketing campaigns within the legal and ethical boundaries set by the local governments and regulatory authorities (Lancaster & Withey, 2007).
SWOT Analysis for Starbucks
The biggest strength of Starbucks is its worldwide recognition as the top quality coffee brand. Starbucks enjoys great customer appreciation and brand loyalty around the Globe. It has a large customer serving ratio per day in the United States and other large target markets which gives it attractive profits and makes it a competitive brand in its industry. A variety of coffee, food, and beverage products also supports the company's high sales by targeting every type of customer. The unique taste and quality of Starbucks coffee has become its core competency in the Global market which largely helps it in beating its rivals (Starbucks, 2013).
In order to produce the best quality products, Starbucks purchases the highest quality of ingredients from the market. The manufacturing, processing, and serving of the products are also done under highly hygiene conditions. On one side where all these things support the company's competitive strategies; they also increase its costs of operations up to a large extent. Therefore, Starbucks has to charge a high price for its products. At present, Starbucks products are the most expensive among their competitor products due to their quality and the extra entertainment facilities offered at the Starbucks Restaurants (Starbucks Gossip, 2013). A large number of customers choose other coffee brands to save their money which is a big weakness of Starbucks. Another weakness of Starbucks is the low demand of some of its products in the Global market. These products are not generating attractive revenues for Starbucks.
Starbucks is not present in various attractive markets of the world. It can expand its operations to become strategically stronger and more successful. It can also improve the taste and quality of its low sales products like juices, energy drinks, food nutrition, etc. In order to generate higher revenues. It can also introduce these products in new flavors to attract the customers. Franchising agreements in the new markets can also help it in doing international expansion with a rapid pace.
Industry rivals are the biggest threat for Starbucks. These rivals snatch its customers by offering similar products at comparatively low prices. They also run promotional campaigns like discounts, family packages, occasional price-cut, etc. In order to attract the potential customers from the market. The day by day rise in the prices of dairy products is also a big threat for the company's profitability. The consumers' trend towards healthy lifestyle and avoiding caffeine is also becoming a potential threat for the company.
Michael Porter's Five Forces Model
i. Rivalry among existing Competitors:
The competition of Starbucks is equally divided into Global and local coffee and food brands. At the Global level, Starbucks competes with the world's top quality brands; whereas at the local level, it has to face direct competition from the small scale restaurants, coffee shops, juice corners, street carts, supermarkets, etc. The intensity of competition is the biggest hurdle in the company's high sales and profitability every year (Mu-hlbacher, Dahringer, & Leihs, 2006).
ii. Threat from the New Entrants:
Finding the fast food and coffee manufacturing a highly profitable business, a large number of manufacturers enter this market every year. These new entrants attract customers using low price strategies and free trials (Patterson, Scott, & Uncles, 2010).
iii. Threat from the substitute products:
All types of fruit juices, soft drinks, energy drinks, tea, and bottled beverages are substitutes for Starbucks Coffee and other products. Due to the availability of these substitute products at every restaurant, supermarket, shop, and street cart, the customers often prefer to use them instead of specially visiting Starbucks restaurant and have an expensive coffee.
iv. The Bargaining power of Suppliers:
There are large number of suppliers for dairy products and other ingredients used in the manufacturing of coffee, food, and beverage products. Therefore, the bargaining power of suppliers is comparatively lower against the coffee manufacturers. For example, if one supplier charges a high price, the manufacturer can switch to other supplier to obtain the required raw material.
v. The Bargaining Power of Customers:
The bargaining power of customers is stronger as compared to that of the manufacturers in the coffee and food manufacturing industry. Reason being, customers use various purchase decision parameters to choose some coffee or food brand. Therefore, if a coffee brand does not fulfill their requirements or perceived purchase standards, they go for other brands.
"Starbucks is facing low demand for its brewed coffee in the Australian market."
Section 2: Primary Research Proposal
The prime objective of this research study is to figure out the reasons for low demand for Starbucks brewed coffee in the Australian market. By identifying these reasons, the company will strategize to increase the demand and improve the sales of its brewed coffee. Keeping the view…