'Recommendation for Starbucks Coffee Company Essay\r'

'INTRODUCTION\r\nThe objective of this report is to conduct food food market analysis and root on appropriate selling strategies for Starbucks Coffee.\r\nIn the report, we leave al whizz firstly look into Starbucks’s goal, its product and markets. Then we volition look into the key biteions and decisions that kick the bucket to the achiever of the companionship. by and by that, we will discuss the copes that Starbucks is facing in this warlike global market. For each strategic issue, appropriate marketing recommendations for the come with ar made respectively.\r\nBACKGROUND AND line ANALYSIS\r\nStarbucks Coffee starts in 1971 with a private store in Seattle’s Pike fructify Market. Today, they atomic number 18 privileged to welcome nearly 35 million guests on a weekly basis, in much(prenominal) than 12,000 stores to the highest degree the world. (www.starbucks.com)\r\nStarbucks’s goal is to pay off the direct seller and brand of burn t umber in each of its target markets by selling the finest pure t genius java and cogitate to products and by providing each node a unique â€Å"Starbucks Experience”. â€Å"Starbucks Experience” is a third place after home and treat with superior customer service, clean and well maintained retail stores which reflect the personalities of the communities in which they operate. Starbucks dodge for expanding its retail occupancy is to add-on its market shargon chiefly by opening additional stores in existing markets and to open stores in new markets. In meet of this strategy, Starbucks opened 1,040 new company operated stores in fiscal 2006. (www.starbucks.com)\r\nDuring fiscal 2006, Starbucks Coffee keep company operated retail stores accounted for 85% of enumerate net revenues. (Starbucks Annual Report 2006) In addition to company operated stores, Starbucks works with certain cautiously chosen championship to operate licensed stores in several(a) places . Its strategy is to reach customers where they work, fail, shop and dine by undercoating relationship with people that shargon the Company’s places and commitment to gauge. These relationships take various forms, including licensing arrangements, foodservice accounts and other initiatives related to the Company’s business. certify and Foodservice stores lav be found on college campuses. Customers merchant ship enjoy their Starbucks in select supermarkets, hotels and military bases passim foodservice venues around the world. During fiscal 2006, specialty revenues accounted for 15% of total net revenues. (Starbucks Annual Report 2006)\r\nStarbucks also of late has strategically sold coffee and tea products by dint of other contributes such as supermarkets, or non-traditional retail channels such as unify Airlines, Marriott multinational, Holland-Ameri mountain Cruise Line, and De come outment line of descents.\r\nMARKET ANALYSIS\r\nTo achieving return an d making profits, Starbucks started to go internationalist since 1996. International connections skunk build a strong foreign figurehead which helps to increase brand recognition and also increase the domestic business. The more stores Starbucks has around the world, the more truth and familiarity commode be built among its existing and electric potential drop customers.\r\nThe following ar the macro environmental variables which are likely to impact Starbucks when going international:-\r\n_GEOGRAPHICAL FACTORS_\r\nStarbucks has conservatively analyzed various strategies for the placement of its stores. They shake off authentic be-saving options for these stores to meet the need to adapt to each geographical region. They also need to consider the tastes and chooseences of each area. For example, customers in modernistic Orleans prefer their bagels toasted and those in Atlanta require more seating for a â€Å"social” coffee break.\r\n_DEMOGRAPHICAL FACTORS_\r\nSt arbucks begin in US, which is the area we are examining for demographics. As of July 2005, the universe of the U.S. was estimated at 295,734,134 (CIA earth Factbook). Population details are crucial to Starbucks because they ignore own Starbucks valuable statistics, such as US population base per Starbucks store. People ages 15-64 make up the largest character of the population (67%), and thence will induce gigantic control of the market than any other sphere of influence (CIA instauration Factbook). This implies that the most important target market for Starbucks are people within this age group. The devil largest ethnic groups in the U.S. are white 81.7%, bootleg 12.9% and Asian 4.2%. (CIA World Factbook) The ethnic background is important to a company because it influences tastes, trends, perceptions, values and beliefs of an private.\r\n_ECONOMICAL FACTORS_\r\nEstimated GDP in 2004 was $11.75 trillion. GDP real(a) emersion rate was 4.4% (CIA World Factbook). The growth rate of GDP suggests that the economy is growing, and in that respectfore there is opportunity for Starbucks to expand business. A real large per capita purchasing might parity of $40,100 suggests that Ameri pottys have the opportunity to buy specialty coffee drinks from an expensive, quality-intensive system such as Starbucks (CIA World Factbook).\r\n_3.4 TECHNOLOGICAL FACTORS_\r\nstrategic issues that will challenge Starbucks in the future are related to their tight control and lack of flexibility, organizational structure, and diversification. First, Starbucks is vertically integrated as they buy and stick the beans, ship them to the stores, produce, and sell the coffee. They whitethorn face difficulties or have to raise the price of their coffee if the cost of raw beans increases, or there is a simplification in available labor.\r\nThe second issue is that they are centralized around controlling all go of the distribution process, entering into joint ventures w hich whitethorn lead to quality control issues in locations.\r\nAnother issue is the ability for growth. Starbucks will continue to grow in their core business, but the more they spread into international and joint ventures they will face increased quality control problems.\r\n_3.5 POLITICAL AND LEGAL FACTORS_\r\nThe Los Angeles city council was considering an decree that would require licensing of coffeehouses open knightly midnight. This demonstrates how government motion prat prove unprofitable for the business. Furthermore, anti-trust laws might counter Starbucks from future expansions, since the company is not owned locally as with other franchisers. Other human-rights activists or organizations can potentially voice their concerns almost the business’s process, such as how the leaflets concerning under-paid Guatemalan eventually forces Starbucks to establish several codes for treatments of its foreign subcontractors.\r\n_SOCIAL CULTURAL FACTORS_\r\nNationalism an d ethnic differences may result in re online problems on resource availability, product quality consistency and costs, which entrap adversely to foreign operations. For instance, due to its population and potential of growth, China represents a grate opportunity of market. In the past, coffee was considered as a Western materialistic commodity in China and people are apply to have tea instead. Coffee doesn’t go well with Chinese food and grow as well. Until recently, the market research shows the country’s coffee drinking has doubled in the past four years. (www.marketwatch.com/news) Nevertheless, it still only amounts to about one cup per person per annum and the brand typically is instant Nescafe.\r\nStarbucks strives to pull in a unique finis with a passionate interest in changing a simple commodity into an addictive gourmet choiceness and meet individual market wants and needs without compromise Starbucks’s brand ascertain and culture of the compa ny.\r\n system RECOMMENDATIONS\r\nStarbucks’s competence in the style of stores and originative coffee drinks has propelled it to the front among coffee retailers. Starbucks is not moreover stands for a cup of fresh and nice coffee. Starbucks is about the passion for the soul of people, quality product, excellent customer service and the experience and understanding of the culture of coffee. In the following paragraphs, we are going to analysis the 4Ps (i.e. Product, Price, adorn and Promotion) of Starbucks, followed by appropriate marketing strategic recommendations.\r\n_PRODUCT_\r\n indemnity Product Strategy\r\nStarbucks has been committed to sourcing the spunkyest quality coffees around the world. It only purchases coffees that have been grown and processed by suppliers who meet strict environmental, social, economic, and quality standards. Starbucks is well-known for its exceptionally high quality coffees, care in selection, and expertise in roast (www.starbucks.com ).\r\nBroad Product specialisation\r\nDepending upon competence and innovation, Starbucks establishes its long lasting and profitable competitive favors by broadly differentiating its coffee and coffee related products.\r\nBrand Image\r\nStarbucks combines its merchandizing strategy with its marketing programs to create and reinforce a distinctive brand image for its coffees. The company’s brand image strategy is reflected in its product mix, producing, and sales and educational materials. What Starbucks stands for is a honourable cup of fresh coffee and the recognized brand global.\r\nRecommendations:\r\nIt is undeniable that Starbucks has a competitive advantage when it comes to quality, especially when compared to other generic coffee commodity. However, in terms of convenience, despite arduous efforts to establish Starbucks at every corner, there are still more supermarkets than there are Starbucks bars. Realizing the potential for this convenience area of the coff ee market, Starbucks should actively pursuing substitutes that compete in these areas, for example a pre-packaged drinks or offer tea in its shops as a preemptive vizor to fight off any teahouse aspect to steal away the coffee drinkers.\r\nSometime Asia can be mistakenly seen as one culture by outsiders. It can be true somehow, even so to be successful in the region. The countries in Asia are totally different when it comes to culture, value, religion, tastes etc. Many Asians prefer for tea especially in China, a county of employ tea drinkers who do not take quick to the taste of coffee. Starbucks should set different strategies and approaches for each market to make Starbucks’s experience to be part of the culture.\r\nTo meet local tastes or preferences, Starbucks can act local, for example, by introducing alcoholic beverageic beverage fro special euphoric hour set in some countries or region. Traditionally Korea and China are huge alcohol consuming culture as well as coffee. High margin of beer, wine or cocktail may help Strarbucks match local tastes and preferences, most importantly, can boost its revenue.\r\n_PLACE_\r\nSite Selection\r\nStarbucks stores are usually gathered in high-traffic, high visibility locations. It takes more than just location to be successful. Attracting customers to Starbucks happens by providing high quality coffee and creating inviting, comfortable places that are conveniently located. These places should be those that add to the spirit of each community.\r\nStore Expansion\r\nStarbucks expands its stores by entering new markets wherever the opportunity exists to become the leading specialty coffee retailer. By the year 2006, its current location totals 12,440 worldwide (www.starbucks.com)\r\nRecommendation\r\nFrom past experiences, customer loyalties cannot be stretched or transferred to a new product or channel in a short time. Starbucks should expect a gradually change on its customers’ purchasing power a nd habits. Eventually, the Internet may reconfigure how customers think of mass-market brands. But that pitch will take years to unfold and company leading need to manager the transition with great skills. Therefore, Starbucks needs to make some change on its current e-commerce strategy.\r\nFirst, it may add more value to its value chain by expending its website knead as a intercourse tool to touch base its stakeholders such as customers, suppliers, management and employees. Second, consolidate the cosmos relation function. Starbucks.com is not only a window for online business, but also a window for make the company’s image and reputation. Third, keep online business on core products but maintain the products diversification as a long-term strategy, and implement it by gradually introducing new products one at a time. Last, to strategic ally with .com companies to expend its selling channels.\r\nStarbucks can setup online chat room to facilitate communication among i ts stakeholders. It may also create free netmail accounts to further spread its fame and consolidate customers’ loyalty. In addition, it can gradually add indirect coffee related products into its online sales collection, such as coffee machine. It may also want to introduce some online coffee tour package to provide cheap travel tours or hotel accommodation. In order to increase sales, Starbucks may also ally with .com companies to promote its products. For example, to sign a sell contract with yahoo.com to carry Starbucks’ products.\r\n_PROMOTION_\r\nStarbucks doesn’t have much conventional advertising because it found that there is too much competition for consumers’ attention in TV, radio and print media. Starbucks usually picks one or two charities or events that reach the community it serves. This will inspire people inside and outside the company and reinforce the company’s value and image.\r\nStarbucks integrates its corporeal culture wit h its surroundings. At all levels of the Company, Starbucks partners strive to be good neighbors and active contributors in the communities where they live and work. It’s part of the Starbucks culture. It is the goal of Starbucks to involve partners as decision-makers, volunteers, and leaders in the initiatives they support.\r\nRecommendation\r\nTo be a real global company, Starbucks can participate in or support local events, helping education in developing countries or community activities so that it can enhance its public relationship with those international markets. In most Asian markets, once it is perceived as a true partner or caretaker, its growth strategy might work just as in US market.\r\n_PRICE_\r\nBest value crack\r\nBy pricing its coffee competitively with the prevalent high-end coffee prices, Starbucks represents an attractive combination of price, features, high quality, good service and other attributes customers find attractive.\r\nRecommendation\r\nThe f act that Starbucks prides itself in customer service, providing the â€Å"Starbucks experience” for the customer, means that the business is mainly customer-oriented, and thus translates to a strong customer’s power. Nonetheless, the greater the importance of the product’s quality or services to the customers, as is the facial expression with coffees, there is little extent to the buyers’ price sensitivity. This indicates that as long as Starbucks maintains quality products and superb customer-service, individual consumers are unlikely to be able to obey their buying powers. Therefore, it’s good for Starbucks to maintain its usual high-end coffee prices.\r\nCONCLUSION\r\nIt is no doubt that Starbucks is one of the most successful company in the world. They used a simply strategy, â€Å"connecting links between treating employees with gravitas and respect and producing a good product and services.” That was the major factors that differ entiate Starbucks from others and bring the successful to Starbucks.\r\nThe future of Starbucks, which is in a fast-growth phase, is apparently to be successful and promising. However, those keys of success may not be applicable to tomorrow’s environment and in global market. fend for and growing a competitive position requires intemperately built strategies based on its unique, valuable and leading capabilities and resources, rather than the products and services themselves, proactively responding to ever changing internecine and eternal environment to keep fending off its competitors. Although before long there are no formidable competitors for Starbucks leadership in both international and domestic markets, it should not take it for granted for good. Tomorrow’s part of Starbucks should depend on its strategic capability to preserve and sustain its strengths, offset weaknesses, avoid threats and capitalize on opportunities. If Starbucks would correctly identify and deal with the issues under current and near future circumstances, it could remain excited about further growth and continues to be prosperous.\r\nList of References\r\nhttp://www.starbucks.com/aboutus/investor.asp\r\nhttp://geography.about.com/depository library/cia/blcusa.htm (CIA World Factbook)\r\nhttp://www.marketwatch.com/news\r\nSandhusen, Richard, 1994, Global Marketing, Hauppauge, New York.\r\nCateora, Philip R., 1996, International Marketing, Irwin, Chicago.\r\nPeter J. Buckley, Fred Burton and Hafiz Mirza, 1998, The Strategy and organization of international business, Macmillan Press, New York.\r\nMasaaki Kotabe, Kristiaan Helsen, 1998, Global marketing management, John Wiley, New York.\r\nBryan Lowes, Christopher annihilate and Stuart Sanderson, 1994, Companies and markets, Oxford, UK.\r\nStarbucks Annual Report 2006 (2006). Starbucks Annual Report. Seattle,WA., Starbucks Coffee Company.\r\n'