Starbucks Marketing Analysis - Case Study Example

STARBUCK’S MARKETING ANALYSIS By (Name) Institution Instructor Class/Course City Date Starbucks deal with and purchase as well as roast the high-quality bean, specialty coffee, and sell them in combination with other beverages. Other than coffee drinks, Starbucks sell coffee drink equipments, expresso machines, coffee brewers, as well as grinders. Among other accessories, Starbucks’ main product is internationally known to be coffee beverage. In the brand analysis of the Starbucks’ products, this study examines the brand details that are associated with the Starbucks coffee beverages. High quality is one of the main company values that are aimed at satisfying the customers (Martin, 2008). As stated by the company’s CEO, Howard Schultz, Starbucks has established value of products by creating an uncompromisable quality and builds a lasting relationship with the customers. The main aim is to promote the brand image of the Starbuck coffee’s love. Brand Analysis One of the vital factors for a company’s success is the brand awareness and its image. The brand name makes the products of a company flow among the consumers and in the public domain. Brand name is an important tool that pushes the company’s reputation and therefore rating to the top, based on the positive attributes associated with a company. Brand image is one factor that Starbucks has tried to maintain through various methods such as quality production, excellent customer services, and excellent management models among others. Starbucks being an internationally recognized brand, this valuable brand among other brands has spread even to places where the company’s physical presence lacks. As argued by Martin, (2008), customers make choices based on their brand’s identity. In this case, Starbucks price premium in the market place creates brand equity. The pricing level of Starbucks is fairly affordable compared to other coffee shops, and customers are exactly aware of that due to the brand identity (Martin, 2008). The brand effect on the other hand has made many people to even afford extra payments for Starbucks coffee over other coffee made by other companies. The strong links that have been created with the customers are the result of strong brand image, effect as well as product effect. Product effect comes when customers assume that Starbucks coffee is of quality bean and has better tastes than others. Based on the analysis by Kotler, et al (2004), the conception of the Starbucks brand association depends on the evaluated situations and varies on the customers’ specific goals in their purchase and consumption decision goals. The company has been making serious efforts to determine the customers’ favorites and the customer perceptions of the Starbucks brands. According to Kotler, et al (2004), the presence of strongly held, favorably evaluated associations that are unique to the brand and imply superiority over other brands is critical to a brand's success. The unique brand association of the Starbucks’ products has really boosted the sales of the company despite the downswings of business over the past year. In an industry with many competitors such the McDonald’s and others, brand management is of critical essence in order to keep the customer base in the market. Brand management has been the company’s priority considering its marketing strategy, and has drawn many benefits to the company. Product Analysis According to Kotler, et al (2004), the Starbucks has initiated ways of leveraging opportunities across products and markets in the world. Through its commitments in evolving as well as enhancements of customer experience with innovative value products, the company aims at a transformed product development and launching of new products that suit the customer preferences and tastes that changes every day. The strong customer response to the company’s offerings and belief has made the company to stay strategic on its products delivery over the years. More importantly, product development and new product launch of Starbucks product is subject of management strategies, but as argued by Ferrell, et al (2008), the Company focuses on advancing its product growth to other regions which have not experience the products from physical perspectives. The analysis of Ferrell, et al (2008) found out that the consumer rating of a product is also as critical as product development itself. In this case therefore, the ways in which consumers retrieve or compute personal brand ratings play an important role in product development. This means that the stages involved in the product life cycle must be very comprehensive in its products nature. Considering the competitive scenario in the market, whereby there are similar products (specialty coffee) that are produced among the companies involved in the same industry, Starbucks has to produce better quality products in order to defend its market share as well as maximizing its sales revenues in the market. In this case therefore, the company maintains an excellent 4ps with excellent product qualities. The product development process involves the development of the existing products as well as new products. It also centers on new markets as well as the existing markets. Market development at the Starbucks is however aimed at penetrating the market further, through increase of sales that result to greater customer satisfaction. The differentiated products that cannot be matched with other products from other companies within the industry make the company have a suited quality and environment for profit maximizations. In addition, the company sells its products at affordable rates that are normally lower than that of its usual competitors like the McDonald’s. In the same way, as the prices rates are fair to the customers, the company maintains a strong brand image and identity, that also enables these products have competitive advantage at the market place compared to others. According to Ferrell, et al (2008) the company has an innovative distributive method of its products which involves Starbucks Card which is convent and gives rewards. As distribution of the products become very intensive, the company offers incentives that to encourage preference over competing products. Lastly, the company has a standardized promotional method that aims at emphasizing the products differentiation. Customer Analysis The customer analysis of Starbucks starts with the analysis of the market potential. In America alone, according coffee association of America estimates found out that over 16 percent of the adult population consumes coffee daily. However, the same estimates found out that 59 percent uses coffee occasionally. Therefore, the overall market size totals about 114 million people in the United States alone. The customer value is of great importance to the management principles of the company (Ottman, 2011). Under customerization, the fostering principle focuses on developing products that greatly satisfy customers to the utmost level all the time. The equity of the Starbucks brand has the strength of energizing the retail experience that the customers may desire in their respective stores all over the world. Through involvement in the real estates, Starbucks has to make sure that there are poor performances at the retail store levels. This makes the customers to enjoy the brand effect and also to be part of the Starbucks experience. Through marketing research and development, Starbucks has been at the forefront in trying to exact the customer satisfaction levels as well as determining their perception level of their products. As argued by Anderson & Lillis (2011), a satisfied customer will not only come alone, but also come with others. In this case therefore, the main focus of the marketing research normally is based on knowing the satisfaction level of the customers in order to device ways of serving them better. Through target customers, like students, affluent customers, well educated customers, among others, the company has devised customer strategy that goes handy with the expansion process through innovation and product growth and success. Competition In order to produce quality products, competition must be present in a market whereby two or more organizations compete for the same potential customers in the industry. In the United States alone, there are over 14,000 outlets that retail coffee products. As time goes, the number firms that rivals Starbucks increases in terms of their expansion plans and strategies. This has made Starbucks to sense the threat of market inversion hence the need to device competitive strategies and growth patterns that focuses into the future. Many of these competitive firms have their strategies focusing on Starbucks as their main industrial rival. However, Because Starbucks is an early mover, the company owns almost half of the nation’s 13,500 coffee bars and none of its competitors appear to catch up. As argued by Ferrell, et al (2008), the industry is at a mature stage whereby there is a medium level of concentration of firms, but 60 percent of the industrial market share is controlled by Starbucks and Dunkin brands. This makes the two firms to have a huge industrial power and determines the trends of the industrial structure. The industrial threats of new entrants are very moderate, based on Ottman (2011), analysis considering that the barriers to entry are not that high to discourage new firms from entering the market. According to Ferrell, et al (2008), the industry’s saturation is moderately high with a monopolistic competition structure. Growth Strategy The company’s growth strategy is based on the company’s core principle of customer and employee values. The customer satisfaction levels determine the revenue patterns, that makes expansion and brand image possible. In this case therefore, Starbucks has rides on its competitive advantage to grow and also to take a growth advantage due to the following; i. Strong market position and global brand recognition ii. Production of higher quality products iii. An excellent human resource management iv. Good reputation among consumers as a result of its excellent social responsibilities initiatives v. Diverse product mix vi. Use of technology and mobile outlets vii. Customer base loyalty References Anderson, S, & Lillis, A. 2011, 'Corporate Frugality: Theory, Measurement and Practice', Contemporary Accounting Research, 28, 4, pp. 1349-1387. Bundy, J, Shropshire, C, & Buchholtz, A 2013, 'Strategic Cognition And Issue Salience: Toward An Explanation Of Firm Responsiveness To Stakeholder Concerns', Academy Of Management Review, 38, 3, pp. 352-376. Certner, J 2012, 'Starbucks: For Infusing A Steady Stream Of New Ideas To Revive Its Business', Fast Company, 163, pp. 112-149. Chen, L., Marsden, J. R., & Zhang, Z. 2012. Theory and Analysis of Company-Sponsored Value Co-Creation. Journal of Management Information Systems, 29(2), 141-172. Fellner, K. 2008. Wrestling with Starbucks conscience, capital, cappuccino. New Brunswick, NJ, Rutgers University Press. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=243103. Ferrell, O. C., Fraedrich, J., & Ferrell, L. 2008. Business ethics: ethical decision making and cases. Boston, Houghton Mifflin Co. Harvard Business Review Press. (2011). Harvard business review on finding & keeping the best people. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=675138. Kotler, P., Kartajaya, H., & Young, S. D. 2004. Attracting investors: a marketing approach to finding funds for your business. Hoboken, NJ, Wiley. Martin, N. 2008. Habit: the 95% of behavior marketers ignore. Upper Saddle River, N.J., FT Press. Mead, R., & Andrews, T. G. 2009. International Management : Culture and Beyond. Chichester, England: John Wiley & Sons. Ottman, J. A. (2011). The new rules of green marketing strategies, tools, and inspiration for sustainable branding. Sheffield [England], Greenleaf Pub. http://www.books24x7.com/marc.asp?bookid=41250. Read More