Starbucks Marketing Analysis Presentation

CRL Consulting Audit: Starbucks MARKETING MANAGEMENT WINTER 20 17

Agenda o Introduction o Mission and Vision Statement o Marketing Objectives o Four P’s o Marketing Concepts o Environmental Sustainability o Marketing Manager Role o Competition

Vision Statement “To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.�

Product Definition vs. Market Definition “We aren’t in the coffee company business, serving people. We are in the people business serving coffee.”

- Howard Schultz, chairman and chief executive officer of Starbucks

Marketing Strategies

Customer experience: ◦ Welcoming atmosphere ◦ Comfortable seating accommodations ◦ Personalization ◦ Backing up their service

Current Strategies Innovation: ◦ Mobile pay technology ◦ Rewards program ◦ In app purchases ◦ Order and pick up

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Environmental Environmentally conscious ◦ Sustainable products and practices

h$p://globalassets.starbucks.com/assets/ ee8121c1a6554399b554d126228d52ed.pdf

Community Community focus ◦ Global company, local stores

h$p://globalassets.starbucks.com/assets/ee8121c1a6554399b554d126228d52ed.pdf

Employee Employees valued as “partners”

h$p://globalassets.starbucks.com/assets/ee8121c1a6554399b554d126228d52ed.pdf

The 4 P’s

Market Share and Expansion (Domestic) Market share of the US coffee industries: o Starbucks o McDonald's o Dunkin

o United States Coffee Industry o US Coffee and Snacks Industry o 13,172 Starbucks stores

h$p://www.womansday.com/food-recipes/food-drinks/a1862/9-thingsyou-didnt-know-about-starbucks-110283/

Starbucks Domestic Presence

www.gizmodo.com

Global Market Share and Expansion

o  Owns more than 24,000 stores in 70 countries o  Future expansions

Starbucks Global Presence

Blog.knoema.com

Key customers o PepsiCo o T ingyi Cayman Islands Holding Corp. o US Foods Holding Corp. o Sysco o Keurig Green Mountain

Restaurant Industry Sales

Annual Financials

www.marketwatch.com

Revenue by Region Starbucks' Segment Revenues

Sales in FY 2016 (in million)

Americas

14,795

China and Asia Pacific (CAP)

2,939

Europe, Middle East, Africa

1,125

(EMEA) Others

2,457

Total

21,316

Adapted from theforbes.com (2016)

Marketing Mix

Product o Variety, quality, and innovative products o Coffee, tea, smoothies, mugs, coffee beans, Frappuccino beverages, bakery, gift items, coffee brewers, music, and books etc. (Starbucks, 2016). o Great customer service for “great experience”. o Modifies its global products o New products

thecoffeeteam.blogspot.com

Product Life Cycles

https://www.degruyter.com/downloadpdf/j/cris.2015.2015.issue-1/ cris-2015-0002/cris-2015-0002.xml

Price o High price for quality products o Additional services o WI-FI, humor and entertainment program o Pricing strategy: based on fair trade (farmers’ wage), local tax rate, minimum wage and other operation costs like rent o Use of price elasticity demand

Product Positioning In The Market

https://www.degruyter.com/downloadpdf/j/cris.2015.2015.issue-1/cris-2015-0002/cris-2015-0002.xml

Promotion o Advertisement in media, internet and billboards; public relations; and sales campaign o Spent $351.5 million on global marketing activities in 2015 o Different policies for different regions based on the local needs

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Placement

o Main channels: cafes, online stores, retailers, and Starbucks app o Cafes are the main channel of transactions across the globe o Selection of location: malls, high-end business areas, airport, universities o Next five years target: additional $1 billion in revenue generation through channel development segment

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SWOT Analysis o Strength: High-grade products, customers' loyalty, and brand reputation, environment efficient management o Weakness: Expensive products, too many stores, dependency on domestic market o Opportunity: Expansion of business in emerging economies, diversification and blend the products, technological enhancements, new distribution channels o Threat: New and existing low-cost competitors, price volatility of coffee beans, customers’ changing tastes, macro economy

Trend Analysis o Potential of alcohol industry o Skewing the brand if not monitored o Company is sitting strong on strategic brand direction o Expansion o House of brands o Marketing and advertising plays a key role in the expansion of Starbucks creating the atmosphere of “the third place”

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Environmental Sustainability and Marketing Concepts

Marketing Manger Concepts o Customer oriented marketing strategy o 3rd place

o Controlling product life cycle o Pumpkin Spice Latte o Holiday season beverages

o Product Profile o Food, Beverages, merchandise o Substitutes http://www.abc10.com

Market Segmentation Demographic: o 18-45 year olds o Both genders

Geographic : o Global markets o The concept of coffee/ tea on the go

Psychographic:

o Based on their lifestyle / attitudes about ‘fair-trade' food.

Behavioral:

o Loyalty/ reward programs o Starbucks gift cards o Mobile pay

Marketing Managers Concepts and Techniques Marketing Managers Role:

◦ Sharon Rothstein: Global Chief Marketing Officer ◦ Focus on Global Presence ◦ Product Range/product performance

Marketing from a global perspective: China ◦ Economic Principles ◦ Challenges ◦ Strategy

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Marketing Adjustments in Foreign Markets China ◦ Stores accommodated for larger groups

Japan ◦ Architecture

India ◦ Market penetration and price sensitivity

Saudi Arabia

o Sensitive logos

France and Europe o Price and quality adjustment

Environmental Sustainability “As a company that relies on agricultural products, we have long been aware that the planet is our most important business partner” ◦ Purchasing renewable energy ◦ Saving energy ◦ Joining together to raise awareness h$p://schoolpress.cdn.whipplehill.net

Environmental Sustainability o Partnered with a local company to reduce waste o Menicon o Made an increased effort since 2008 to do more for the environment o Recession o Energy o Water Consumption

h$ps://envirocomm.files.wordpress.com

Marketing Manager

Marketing Manager o Develop an annual plan for territory to attain goals o Portfolio (Seattle’s Best Coffee, Evolution Fresh, La Boulange, Tazo and Teavana) o Create relationships with key decision makers o Local companies o Act as liaison between IT and senior leadership o Boom in technology based marketing

Starbucks Marketing Sharon Rothstein Chief Marketing Officer “Steward for Starbucks Brand�

(Starbucks, Executive Team, 2017)

http://marketingstrategynow.com

Starbucks’ Marke/ng Leadership “Steward for Starbucks Brand” (Starbucks, Execu8ve Team, 2017)

Sharon Rothstein Chief Marke\ng Officer

Kris Engskov, EVP Retail Development

Senior Manager

Julie Key, VP, Channel Development

Director of Rela\onships

Leanne Fremar,SVP Crea>ve Director

Visual Communica\ons

Adam Brotman, EVP Global Retail

Field Opera\ons Manager

Marissa Andrada, SVP Global Marke>ng Team

Director of Marke\ng

Alex Wheeler, VP Global Brand Management

Brand Manager

Ka>e Seawell, SVP Global Marke>ng

Social Media Manager

Starbucks Marketing Manager Role o

Important Role in Driving Strategic Plan across different marketing channels

o

Builds Starbucks brand value with strong agency and program management

o

Leads the team to execute strong advertising and promotions

o

Manages Relationships

o

Inspire Creative Team with clear and concise messaging

o

Responsible for clear communication o

o

Timing, process, and development

Informs Marketing Strategies and execution details to Senior level leadership, management, field and other departments

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Four A’s of Marketing

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Working Together Strong Strategic Management team + Strong Marketing Strategies = Ongoing Company Success h$ps://s-media-cache-ak0.pinimg.com

Competition

Market Saturation o Starbucks has a large national and international reach, with 25,000 stores in 75 countries o In the final quarter of 2016 the company opened 690 new stores o Dunkin’ Donuts 11,300 stores in 36 countries o T im Hortons 4,590 stores with 3,665 of those stores being in Canada

Customer Engagement Facebook followers ◦ Starbucks ~ 34 million ◦ Dunkin’ Donuts ~ 14 million ◦ Tim Hortons ~ 3 million ◦ Folgers ~ 1.5 million

h$ps://www.theodysseyonline.com

Improvement

o Starbucks still has room for improvement, as they rank third in coffee sales behind Keurig Green Mountain and Folgers

References Economist, T. (2015, February 14). A loss-making machine. Retrieved January 12, 2017, from http://www.economist.com/news/business-and-finance/21643271-tax Gale Group. (2016). Roasted Coffee. [Industry profile]. Retrieved January 19, 2017, from Business Insights: Essentials database. http://bi.galegroup.com/essentials/article/GALE%7CRN2501400044/07e1bc4c51ad950b17ced8d7ca829076?u=nysl_sc_elmira Groden, C. (2015, September 29). Here are the 5 top-selling coffee brands. Retrieved January 18, 2017, from http://fortune.com/2015/09/29/top-coffee-brands-keurig/ Investopedia. (2010, August 16). Green Marketing. Retrieved January 15, 2017, from http://www.investopedia.com/terms/g/greenmarketing.asp Kotler, P., & Keller, K. L. (2015). Marketing management. Upper Saddle River, NJ: Pearson Prentice Hall. Living our values, corporate social responsibility. (2003).

National Restaurant Association. (n.d.). Restaurant industry food and drink sales in the United States from 1970 to 2016 (in billion U.S. dollars). In Statista - The Statistics Portal. Retrieved January 10, 2017, from https://www.statista.com/statistics/203358/food-and-drinks-sales-of-us-restaurants-since-1970/.

References Paladin Staffing (2017). Marketing Manager Job Description. Retrieved January 21, 2017, from http://www.paladinstaff.com/jobs/careers/marketing-manager-job-description/ Rajasekaran, R. (2015). Starbucks' entry into tea-drinking India. IUP Journal Of Brand Management, 12(3), 45-58. Retrieved January 13, 2017, from http://ezproxy.elmira.edu:2048/login?url=http://search.ebscohost.com/login.aspx? direct=true&AuthType=ip,uid&db=bth&AN=111807909&site=eds-live Speculations, Great. (2016, January 18). How Starbucks plans to grow its international operations. Retrieved January 19, 2017, from http://www.forbes.com/sites/greatspeculations/2016/01/18/how-starbucks-plans-to-grow-its-international-operations/ #14f7b1905fc7 Starbucks 1912Pike.com Blog. (2016, July 8). Starbucks Japan finds innovative ways to recycle coffee grounds. Retrieved January 18, 2017, from https://1912pike.com/starbucks-japan-recycle-coffee-grounds-as-fertilizer/ Starbucks, Annual Report. (2003). Living Our Values, Corporate Social Responsibility. Retrieved January 18, 2017, from http://globalassets.starbucks.com/assets/e31d4604b78141bfb13172aa5fd67cfa.pdf

References Starbucks, Newsroom [A] (2016, December 01). Starbucks announces new leadership structure to drive global growth [Press release]. Retrieved January 18, 2017, from https://news.starbucks.com/news/starbucks-announces-new-leadership-structure Starbucks, Newsroom [B] (2016, November 01). ‘Tis the Season: Starbucks 2016 Holiday beverages return [Press release]. Retrieved January 18,2017, from https://news.starbucks.com/news/starbucks-holiday-beverages-2016 Starbucks, Newsroom [C] (2017, January 03). Starbucks debuts its first single-origin Yunnan Coffee in China [Press release]. Retrieved January 18, 2017, from https://news.starbucks.com/news/starbucks-first-single-origin-yunnan-coffee-in-china/ Tălpău, A., & Boşcor, D. (2011). Customer-oriented marketing - a strategy that guarantees success: Starbucks and McDonald’s. Bulletin of the Transilvania University of Brasov. Series V: Economic Sciences, 4(1), 51-58. Retrieved January 13, 2017, from http://ezproxy.elmira.edu:2048/login?url=http://search.ebscohost.com/login.aspx?direct=true&AuthType=ip,uid&db=bth&AN=66180384&site=edslive Wang, W. (2015, April 14). Top Ten Sustainability Initiatives of Starbucks Corporation. Retrieved January 15, 2017, from http://cleantechies.com/2012/02/20/top-ten-sustainability-initiatives-of-starbucks-corporation/ Willis, J. (2016, May 08). Starbucks stock: analyzing 5 key customers. Retrieved January 19, 2017, from http://www.investopedia.com/articles/markets/050816/starbucks-stockanalyzing-5-key-customers.asp