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Marketing Analysis of Starbucks: SWOT, PESTEL and Marketing Mix

4393 words (18 pages) Business Assignment

26th Oct 2020 Business Assignment Reference this

Tags: Business AssignmentsMarketing

Introduction

Marketing is considered as one of the biggest weapons for any business to achieve its desired goals. The business which performs its marketing functions effectively can increase its sales, profit margin, can get a competitive advantage against its competitors and overall can achieve a strong position in the market (Churchill and Iacobucci, 2016). For performing all the marketing functions effectively, a business organization needs to appoint skilled people who can do appropriate research for this. The business organization can deal with its customers by using several marketing essentials. This study will explain different marketing essentials of Starbucks with the help of SWOT analysis, PESTEL analysis and marketing mix of this company. A marketing plan is essential before starting any business. Marketing is considered as one of the biggest weapons for any business to achieve its desired goals. The business which performs its marketing functions effectively can increase its sales, profit margin, can get a competitive advantage against its competitors and overall can achieve a strong position in the market (Churchill and Iacobucci, 2016). This study will explain the marketing plan of Starbucks with the help of SWOT analysis, PESTEL analysis, and marketing mix of this company.

Explaining the leading roles and responsibilities of the marketing function.

Marketing: Marketing is a crucial part of management for any organization. In simple words, marketing refers to the procedure which a business organization follows in order to communicate with its target customers and informing them about its products or services (Schmitt, 2014). Marketing helps the business organizations by providing proper information for creating products or services as well as by identifying the way of delivering these products or services to the target customers of the business organizations.

Importance of marketing for Starbucks: Starbucks has been performing its operations from 1971 to the present days successfully. But now, many companies are established as the competitors of Starbucks like Costa Coffee, Dunkin Donuts, McDonald's also. Intense competition exists among them in terms of capturing the market by attracting most of the customers of the market. For remaining the market leader and competitive, Starbucks need to focus on its marketing functions. Through proper planning for marketing and the accurate execution of the developed plans, Starbucks can ensure the chance of getting a competitive advantage better than its competitors. The accurate execution of the developed plans will help Starbucks to reach to its target customers faster than their competitors and they will able to know the needs of their customers and to produce the products or services that will meet these needs before than their competitors. These activities can increase the production, sale and profit of Starbucks and can help them to be a competitive organization in the market. That means marketing is vital for the overall improvement and growth of Starbucks.

Marketing functions of Starbucks: Marketing functions refer to a set of interrelated actions which are performed by an organization for identifying the needs of the target customers of that organization, identifying proper offerings like products or services to fulfil the needs of the customers and making these offerings available for the customers (Weld, 2015). There are different marketing functions that a business organization does in order to gather necessary information and communicating that information with the owner of the organization as well as the target customers of the organization. Analyzing the market, segmenting the market based on several criterions like geographic, demographic, behavioral and psychographic,  grading the products or services, pricing the products or services, distributing the products or services to the customers and providing after-sale services to the customers are some examples of marketing functions that an organization can do (Weld, 2015). There are some roles and responsibilities of each marketing function that have to be performed. These roles and responsibilities of marketing functions are explained below:

Identifying market needs: The first and foremost role of the marketing functions of Starbucks is to identify the needs of the customers in the market. Different marketing functions are done in order to know what are the wants of customers. Market research and market analysis, these two marketing functions mainly have the responsibility to identify the needs of the customers, which are unfulfilled yet (Lehmann, 2017). For market segmentation also contributes to making the identification of market needs easier for the organizations. If the identification of market needs goes wrong, then the rest of the works cannot be right.

Meeting identified needs: Marketing functions play an essential role in satisfying the customers’ needs. Through several marketing functions, an organization, for example, Starbucks can identify the needs of their target customers which are not fulfilled yet. After knowing these needs, they can produce the necessary products or services for satisfying these unfulfilled needs of the customers. Thus, marketing functions help Starbucks to meet their customers’ needs.

Informing customers about offerings: The primary role and responsibility of the marketing functions of Starbucks is to inform their customers about the produced products of Starbucks. The marketing functions inform the customers about all the details of the products, including qualities, prices, conditions for availabilities, and so on(Lehmann, 2017).

Predicting future needs: The needs of customers can be changed in future for many reasons. Through the marketing functions, Starbucks can recognize and predict the needs of the customers these may arise in the future. The responsibility of marketing functions is to inform the organization about future needs. Market analysis can predict future needs by collecting and analyzing customers’ needs as well as future trends.

Marketing strategies

BCG Matrix

Explaining how roles and responsibilities of marketing relate to the broader organizational context

Operations of Starbucks: Starbucks is an America based coffee company and coffee chain. It has started its journey in 1971 in America, but now it has expanded its operation more 30,000 locations in the whole world. Behind the success of Starbucks, there are several reasons, including its effective marketing strategy. Now there are many competitors of Starbucks and to provide fierce competition to all the competitors, Starbucks needs to maintain all its operations effectively and efficiently. The primary operations of Starbucks are discussed below:

  1. Financial operations: Finance is the most crucial element for doing anything. Financial operations indicate the activities which are related to finance (Moosa, 2013). The financial operations of Starbucks include making a budget in which money is allocated for all the works, ensuring smooth distribution of money to all the units of the organization, making reports of sales and profits. By doing all the financial operations accurately, Starbucks has become a renowned name in the world.
  2. Human resource operations: Human is one of the crucial resources for operating a business organization. Human resources operations of Starbucks include selecting and recruiting appropriate people, providing them proper training so that they can achieve the skill that is needed for the success of the organization, providing both intrinsic and extrinsic motivation to the recruited people for encouraging them toward their works and also maintaining good relationships with the employees of all the levels of the organization (Schuler and Welch, 2012). As Starbucks is an internationally operated company, it has established international human resource practices that are followed in every location where it operates.
  3. Marketing operations: In previous times, Starbucks thought its brand image is the most reliable marketing for them, and they do not need to make any further investment in marketing. But in recent times, they feel the importance of marketing, and they are started to focus on marketing operations. The primary marketing operations these are done by Starbucks are dividing the market into different segments, analyzing the current needs of the market and the marketing mix including products, prices, places, promotions and so on.

The interrelation of the marketing unit with other functional units of Starbucks: Every business organizations have at least three or four units to perform their operations smoothly. As Starbucks is an established company in the world, it has many units along with marketing unit within it. For the continuous growth and success of Starbucks and for remaining competitive in the industry, it is necessary for Starbucks to maintain all the units effectively because all the units are interrelated and the failure of one unit may create problems in other units.  The interrelations of the marketing unit with another functional unit of Starbucks are represented below:

Marketing and finance unit: Marketing and finance are so interrelated that the operations of one unit cannot be effective without others. To do the marketing functions, Starbucks needs to make an investment because less supply of money can make its marketing operations weak. And the successful completion of the marketing functions increases the sales and profit of the organization, which ultimately indicates the financial improvement of Starbucks.

Marketing and human resource unit: Marketing unit and human resource unit are interrelated in the way that marketing operations need the help of human resources to be completed. Without the use of the human resource, the marketing functions of Starbucks like market research, market analysis and advertising cannot be possible. On the other hand, the marketing functions inform the human resource unit of Starbucks, whether they need to increase their efficiency and productivity or not.

Marketing and production unit: The production unit of Starbucks is related to the marketing unit. The marketing unit serves the production unit with the information that what are the current and unfulfilled needs of the customers that the production unit can fulfil by producing appropriate products.

Thus, the marketing unit of Starbucks is interrelated with other units of the organization.

Comparing the ways in which organizations apply the marketing mix to the marketing plan process to achieve the business objectives.

Marketing mix of Starbucks Company and Costa Company

According to Tu et al., (2018), the marketing mix is the process of calculating the exact market situation of a company by which they can achieve the business objective accurately. the elements of the marketing mix are given below on the basis of the Starbucks company.  Below I am going to discuss the marketing mix of both companies.

Source: Pinar et al. (2016)

Product

Starbucks: The main product of Starbucks is different types of coffee. It means it is a brand of coffee. Different types of coffee, including black and hot coffees, are the primary products of the company. However, in different countries, the company is selling some additional products such as ice cream, fried chicken etc. besides coffee.

Costa: It is one of the best coffee outlets from all around the world, like Starbucks, they are selling a wide range of different coffees, cold drinks such as ice blends and cold coffee.

Place

Starbucks: Has worldwide reputation and so, the company is being able to operate their business in more than 70 countries worldwide. They have more than 5000 outlets around the world. Also, the company has an opportunity to sell their products online.

Costa: Costa coffee is spread all over the world with 3300 outlets in 31 countries and is mainly found in airports, malls and other premium places.

Price

Starbucks: Most of its products and services are rated at a high price. They follow different types of pricing strategies, but they are not following any competitive pricing strategies because they are setting a higher price than competitors. Market skimming pricing is mostly followed by the company.

Costa: The price is different depends on the quantity ordered and the addition of extra chocolate ,milk. They give customers the best coffees and fresh food .

Promotion

Starbucks: Promotion is essential to spread product knowledge and information and to attract customers to increase sales. Starbuck is following several promotional strategies such as gift card, online advertisement, social media advertisements etc.

Costa: Costais not based on an advertisement on TV or print media to promote their products, but they use digital media and  free samples offered to its customers for purchase intention getting  reviews.

People

Starbucks: Starbucks is mainly a customer-oriented company, and they are trying all the time to provide the best product at a reasonable price. They make every moment of the customers unique. That’s why they are staying in the mind of customers (Kotler and Lee, 2017). By doing such type of great activities, they made 200000 customers around the globe now, which is increasing day by day.

Costa: Costa has a number of 20 thousand employees .Employees must have polite and professional behaviour with their clients to make them feel comfortable. They wear black uniform being for all the employees the same colour.

Process

Starbucks: The company takes a reasonable price for using the high level of technology at the time of making coffee and tea (Pinar et al., 2016). They offer different lottery cards by which the customers can get different discounts and offers. This card makes the customers regular. They have their own distributing channel as well.

Costa: All stores have the same design and arrangement. When the customer enters the store, the employee presents the menu card to him. After the order has been taken, the employees make available to the customers as soon as possible the requested products. Bill payment is the last process; Costa coffee uses online and cash payment, by card, etc.

Physical Evidence

Starbucks: In different popular places, Starbucks posted billboard, Kiosks, and lift let as well. They are using their logo at the outside of the mug, and cups. They are producing tissue papers with logo and cards with contact information which proves physical evidence of the shop. Loyalty program and gift cards have been offered by the Starbucks and are offering a different discount for those cardholder customers in more than 5000 outlets around the globe.

Costa: For the company, the outlets are the physical evidence with most outlets in the U.K (2100) with a total of 3300. They sell cups of coffee to its clients with their logo.

Designing a strategic marketing plan that tactically applies the use of 7 Ps to achieve overall marketing objectives

Marketing plan of Starbucks

SWOT analysis

An organization can make a SWOT analysis as a strategic course of action.  SWOT analysis shows the strengths, weaknesses, opportunities and threats of the organization and it helps the company to find advantages, weak points, opportunities that the organisation has, and the threats that the organisations meet.

  • Strength

They help the organisation in finding out what advantages it has, what it can do better than others, from where it can collect resources, what the customers see in its market as its strength, and what is the firm’s Unique Selling Proposition (USP). Starbucks deals with different coffees, and it has the advantage to set portfolio management to earn benefit from several coffees. By collecting customer’s feedback, it can learn its market strengths. It needs to identify what it can offer to its customers that other firms can’t (Yew Wong, and Aspinwall, 2014).

  • Weakness

It assists a firm to find out what to improve, what to avoid, what factors will affect the firm to lose sale etc. Starbucks is a massive company in the USA. It can focus on some factors like developing its products’ quality, improving its training section for the employees etc. There are many barriers like misbehave to customers by employees, insufficient resources etc. can hamper the selling process of the firm. So the firm should be aware of these (Ward, Duray, Leong and Sum, 2015).

  • Opportunity

It helps to find out what better opportunities it has, what trends it can deal with etc. Starbucks must find out what opportunities it has in the market. If Starbucks utilizes the opportunities in a proper way, it will produce a massive profit for the company. On the other hand, the government creates opportunities for the company. For example, when the govt. reduces taxes; it creates an option for the company to invest more money with the low cost of capital. If Govt. allows new technology, the company can produce more profit by using them. Besides, local and traditional events create significant opportunities for the company (Yew Wong and Aspinwall, 2014).

  • Threat

Threats identify what barriers a company can face, if the technology changes, either it will create a threat or not for its position, the company has any bad debts or not, the company has any quality standards’ problem or not. Starbucks has to identify these threats so that it can secure its position for the future (Ward, Duray, Leong and Sum, 2015).

PESTLE analysis

Political environment: There are both advantage and disadvantage of the political environment and Starbucks is facing the same. Though the political condition of the UK is stable, they are giving high agricultural tax, corruption, and bureaucracy to the government. In the UK, the outsourcing of coffee is less costly; all the tax policies and regulation are under control.

Economic environment: Economic factors are a mix of economic growth, inflation, interest rates, exchange rates, etc. These factors affect the organization operations and the entire business. For example, Starbucks needs to loan money to start a business in UK. If the interest rate is high, then Starbucks has to analyse and make decisions accordingly . The rate of interest and inflation are always changing. Nowadays the labour cost is also high. That’s why the profit is not fixed, and the demand for coffee is gradually increasing.

It can take the loan with high cost, or it can terminate the target to open the business in the UK because it can increase the operating cost for the business. On the other hand, inflation can affect the business. It can increase or decrease the purchasing power of customers and businesses. Besides, if UK’s economic growth is good, it can have a positive effect on the business (Ayyagari, Demirgüç-Kunt and Maksimovic, 2018).

Social: Social factors include age distribution, population growth, age distribution, health consciousness, education level, career attitudes, cultural trends, etc. For example, the people in Germany do not like hamburgers. In order to operate the business in the UK, Starbucks has to revaluate the menu. As population is growing day by day, Starbucks has to produce more to meet with the consumers' demands. Social factors affect directly on the business, and these factors help the business to know the needs, wants and demand of the customers (Eifert, Gelb and Ramachandran, 2015). Every day people of all over the world are changing the culture as drinking coffee culture. Most of the middle-class people are consuming coffee now. The number of middle-class people is also increasing.

Technological environment: Technologies are changing, and customers want fast services in the market. To be able to face the competition, the business has to upgrade their technologies; otherwise, they will lose customers. Because customers want excellent services from the business, the business must modify their existing technologies (Ayyagari, Demirgüç-Kunt and Maksimovic, 2018).

Because of technological advancement, people prefer to purchase coffee online, and technology is also needed for processing coffee.

Ecological: Environmental factors include increasing shortage of raw materials, pollution targets, doing business as a sustainable company, carbon footprint targets set by governments, waste disposal, sustainability etc. Before starting a business in the UK, Starbucks must identify whether the resources of raw materials are sufficient. To manage the competition in the market, the company must decrease waste of materials. On the other hand, the business must ensure the best use of resources (Eifert, Gelb and Ramachandran, 2015).

Eco-friendly attitude is increasing day by day. The climate-changing situation is now a big issue all over the country. It has a negative impact on producing coffee.

Legal: Legal factors are comprised of equal opportunities, advertising standards, consumer rights and laws. In order to operate the business in the UK, Starbucks must ensure the customer rights and obligations are met. The company must collect information about advertising standards. Product labelling and product safety are the primary concern. The company must obey the rules of product labelling in the country. It must ensure that its products in the country are safe to sell (Gunningham, Kagan and Thornton, 2013).

Different law has been created internationally, including labour law, consumer law, export-import law, etc. Those have a significant impact on Starbucks.

In this report, a complete marketing plan has been discussed. Starbucks has to take some initiatives to capture the increasing rate of coffee users. Adoption of new technology will increase the production of coffee, and it will help the company to capture the middle class. Price should be reduced o that everyone can drink coffee.

Conclusion

Starbucks is a company which performs its marketing functions effectively can increase its sales, profit margin, can get a competitive advantage against its competitors and overall can achieve a strong position in the market. Starbucks followed a different pricing strategy, and they are taking the high price for their technological use and product quality. In several outlets, the customers do not attract to drink coffee with a high price for this purpose in those stores they make price low. The company is offering different package offer with low price, which is available at the different grocery shop the business organization is dealing with its customers through using several marketing essentials. This study has explained different marketing essentials of Starbucks with the help of SWOT analysis, PESTEL analysis and marketing mix of this company. A proper presentation has also been displayed.

References

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