I.

Executive Summary
Starbucks Corporation is known for its coffee and tea products. Starbucks also
offers pastries to increase sales and have new consumers. The company aims to have
market share growth, enter the new market, locally and internationally, launch new
products or services, build brand awareness, and improve internal and external
communication.

Starbucks offers products with a consistent taste and quality which makes
Starbucks keep moving. The company also has a Loyalty Program, a way to reward
customers who buy their products. The company’s positioning strategy is about giving
more than what the customer needs. They also promote excellent store ambiance,
environmental protection, and social commitment. Starbucks is an expert at using value-
based pricing to improve profits, and they use research and consumer analysis to
develop targeted price increases that collect the highest amount of willing customers’
spending without driving them away. Office coffee distributors is one of the ways of
company to distribute their products. There are three main modes of transport used by
Starbucks Corporation: Air, Water, and motor. Starbucks uses a large variety of
channels to market their products from social media to TV spots and ads. Its their mix of
meeting media that makes their brand recognizable, and it’s the consistent message that
comes across every time they make them stand out.

II. Study Background

a. Brief history of the company

Starbucks originally started in 1971 by Jerry Balswin, Gordon Bowker, and Zev
Siegl, with its first shop located in Seattle’s historic Pike Place Market. From this
location, Starbucks sold high-quality whole coffee beans, dark roasted in small
batches, the European way. Its name was inspired by the classic tale, “Mobby-Dick”,
evoking the seafaring tradition of the early coffee traders.

b. Mission and Vision

Mission

· Is to inspire and nurture the human spirit- one person, one cup
and one neighborhood at a time.

Vision

· To treat people like family, and they will be loyal and give their all.

c. Product/Service Offering

Starbucks is widely known for its coffee products such as lattes, Americanos,
mochas, and Frappuccino blends. It is also known for its tea products like chai tea
lattes, green tea lattes, passion tango tea, and black tea varieties among others.
 Starbuck products include handcrafted beverages such as lattes. Frappuccino
blends. Cappuccinos, hot and iced espresso drinks, smoothies, refreshers, and teas.
The coffee giant also offers brewed beverages such as the house blend, veranda
blend, Starbucks French roasts, and many more. Other products include food items.
You can get breakfast and lunch items on the store’s menu. In short, Starbucks is a
coffee, tea, and selected food items product. We cannot classify it as solely coffee
because the coffee chain has continued to expand its menu to include other
products. Starbucks has expanded its food products such as sandwiches, snacks,
protein boxes, and egg bites.

Starbucks makes coffee, snacks, and tea products. You will walk in and order a
beverage that will be handcrafted by skilled baristas. Starbucks is also famous for its
great roasts. These can be purchased at grocery stores. Starbucks has dark roasts
like the French and Italian roasts, medium roasts, and blonde roasts. Starbucks
acquired Teavana tea for $620 million to expand its tea products. You can get green
tea, chai tea, black tea, and herbal tea. To be specific, Starbucks makes espresso
drinks, mocha, hot and iced teas, hot and cold brews, and many refreshers. Starbuck
products are enjoyed both in-store and at home. You can buy a coffee blend for your
home French press or espresso machine.

Starbucks offers customer services by promoting a welcoming and safe

ambiance in its stores. It offers coffee services for many businesses and the coffee
preparation services are top-notch. In 2019, Starbucks rolled out offer delivery
services to its customers. The aim was to reach all people at their convenience. It’s
now possible to get a Starbucks at your location of convenience. Starbucks customer
services start the moment one walks through their door. You will notice welcoming
smiles from the ever-friendly baristas. The next thing is the setting of the store. The
company has intentionally created a cozy and inviting atmosphere to attract
customers.

III. Macro-environmental analysis

a. Economic

· The foremost external economic driver for Starbucks is the

ongoing economic recession, which has dented the purchasing
power of the consumers.

· However, studies have shown that consumers instead of cutting

down on their coffee consumption are shifting to lower priced
alternatives which is an opportunity for Starbucks.

· The company still must contend with rising operational and labor
costs as the inflationary macroeconomic environment coupled with
the falling profitability is squeezing the company from both ends of
the spectrum.

b. Politico-legal

· Starbucks faces concerns over sourcing of its raw materials that

has attracted the attention of the politicians in the West and in the
 countries from where it sources its raw materials. That is why
Starbucks is keen on adhering to social and environmental norms
and to follow sourcing strategies that are appropriate and in
conformance to the “Fair Trade” practices that have been agreed
upon by global corporations and the governments of the
developing and the developed countries.

· Starbucks also needs to adhere to the laws and regulations in the

countries from where it sources its raw materials. This has been
necessitated because of activism and increased political
awareness in developing countries, which form the basis for
Starbucks’ sourcing strategies.

· Starbucks’ regulatory pressures within its home market in the

United States because of greater scrutiny of the business
processes that multinationals based in the US are now subject to.

c. Socio-cultural

· Starbucks needs to offer cheaper alternatives without sacrificing

the quality and this is the key socio-cultural challenge that the
company faces as it expands its consumer base to include the
consumers from lower and the middle tiers of the income pyramid.

· The “green” and the “ethical chic” consumers who fret about
social and environmental costs of the brands they consume
means that Starbucks must be cognizant of this trend.

· The retiring baby boomer generation means that spending by the

older consumers is likely to taper off and hence, Starbucks would
have to lookout for tapping the Gen X and the Millennials as part
of its strategy.

D. Demographic

· Starbucks markets to both males and females, in a wide age

group of 22 to 60 years, with a focus mostly on urban and
suburban centers. The target market is relatively affluent, middle
and upper class, as well as educated, socially aware, active and
busy. There is a strong emphasis on beverage sales, amounting
to over $18 billion in 2021, compared to food products sales of just
over $5 billion during the same period.

E. Technological

· Starbucks is well poised to reap the benefits of the emerging

mobile wave as it has tied up with Apple to introduce app-based
discount coupons, it can expect to ride the mobile wave with ease.

· The company has already introduced Wi-Fi capabilities in its

outlets so that consumers can surf the web and do their work
 while dipping coffee. This is indeed an added value to the
Starbucks brand and something, which enhances the consumer
experience.

· The company also can introduce mobile payments, and this is

something that it is already testing out in pilot locations in the
United States.

F. Natural

· The company manage to work around the natural environments of

their area of operations. As a company that relies on the
agriculture products, Starbucks is aware that the planet is the
most important business partner. Starbucks’ approach to reduce
the environment means looking at all aspects of the business, how
they intersect and how can integrate new solutions to create
meaningful and sustained change.

IV. Opportunities and Threats

Opportunities
The following are the opportunities based on the macro-environmental factors:

Expansion in developing markets

Starbucks has coffee houses mainly in the US. Global expansion in emerging
economies can give a great opportunity to the company.

Business diversification and Products Specification

It can further diversify its business operations to improve overall revenue growth
opportunities. Besides, developing products as per the customer preferences is the
specific target market is also a profitable opportunity.

Introducing new products

As the company is quite popular, introducing new products and holiday flavors
under its name would be profitable and welcomed in the markets.

Partnerships or alliances with other firms

The company can develop partnerships and alliances with major firms. This
would strengthen its presence and market share.

Coffee Subscription

The company can try a new coffee subscription business model to expand its
customer base.
 Threats
The following are the threats based on the macro-environmental factors:

Competition with low-cost coffee sellers

Many coffee houses offer products at an affordable rate. This can threaten the
future’s stability of Starbucks which offers higher prices.

Imitation

Products can be imitated by both new and old rivals.

Independent coffeehouse movements

There are many socio-cultural threats for Starbucks. These socio -cultural
movements support small independent and local coffeehouses and oppose the
expansion of large multinational chains.

Coronavirus

It is expected that pandemic will continue to have a significant impact on

Starbucks financials performance due to reduced customer traffic and store hours.

Rising Prices of Raw Coffee Beans

The price of raw coffee beans, which is the Arabica, the world’s most-produced
coffee, has increased dramatically during the pandemic due to concerns over its
availability, hoarding, and supply chain disruption. Any additional dollar channeled to
purchase raw coffee beans at an increased price reduces Starbucks’ profitability.

V. Micro-Environmental Analysis

a. The Company
A company's organizational culture widely influences employees and business
performance through values, customs, traditions, and related behavioral expectations in
the business organization's context. In Starbucks, the organizational culture permeates
all aspects of the business, including the operations of franchisees and licensees.
Starbucks has an organizational culture that relates with the company's strategies for
successful brand development and the global growth of the franchise and licensing
network, despite challenges tied to economic fluctuations and industry-specific trends.

b. Suppliers
For more than 40 years, Starbucks has been dedicated to inspiring and nurturing the
human spirit - one person, one cup and one neighborhood at a time. We are honored to
partner with suppliers who share our commitment to enhancing the Starbucks
Experience for the customers and communities we serve. By actively seeking diverse-
 owned businesses to purchase from, we help build prosperous communities. Starbucks
sources tea from third-party certified farms. The company's key suppliers are domiciled
in the United States, Singapore, Hongkong, Mexico, Indonesia, France and other
countries. Some of these suppliers are the Regency Centers, First Capital Realty, Tingyi
Cayman Islands Holding Corp., and Dean Foods.

c. Marketing Intermediaries
The Starbucks Experience starts at plant locations where there are opportunities to work
with green coffee beans, full-leaf tea and fresh juice ingredients from the very beginning.
Some of the company's distributors are Kent Flexible Roasting Plant, Augusta Roasting
Plant, and Carson Valley Roasting Plant and Distribution Center. With a focus on
continuous improvement and lean principles, Starbucks will continue their innovation and
process optimization to produce and distribute the best quality products.

d. Customers
Starbucks is a global brand with stores in North America, Europe, Asia Pacific, the
Middle East, Africa and China. The United States has the most Starbucks stores of any
country, with California in the lead, home to just over 3000 locations, representing 19%
of all US stores. The company's geo spread is mostly urban and suburban areas,
capturing a large walk-in crowd and drive-thrus.
Starbucks age demographics is typically between 22 and 60, with the average age of the
Starbucks customer being 42 years. The Starbucks customer demographics includes
both male and female, highly educated and in a high income bracket. Starbucks target
demographic includes students, professionals and employees. The typical Starbucks
customer is single or newly married, as well as parents of younger or older children. It is
a popular coffeehouse brand for the middle to upper class population. With high
socioeconomic status, Starbucks target customers are busy achievers and workers, who
have a budget to spare and spend. They are health conscious, socially aware, value the
brand they choose and care about the environment. Starbucks customers are loyal,
often developing a habit of visiting the store regularly. According to start.io, one
customer noted that they buy from Starbucks everyday, adding up to over $2000 a year.

e. Competition
A study by research and market estimates that the global coffee market will reach
$144.68 billion by 2025, a CAGR of 7.60% from 2021 to 2025. This statistic could mean
that Starbucks has ample opportunity to grow it's business further in the coming years.
But the company will continue to face stiff competition from several entrenched rivals.
One of Starbucks' top competitors is Dunkin' Donuts. Dunkin' is an American coffee and
doughnut company. It has its headquarters in Canton Massachusetts, and operates as a
subsidiary of Inspire Brands, a holding company that owns Arby's and Buffalo Wild
Wings. Dunkin' Donuts has a more competitive pricing strategy focusing on the middle
class, which could help it gain market share from Starbucks in the future. While this
business model gives Dunkin' a higher profit margin, it also limits the company's ability to
 expand quickly into new markets. Another top competitor of Starbucks is McDonald's.
McDonald's Corporation has a long history of successful expansion and now is the
world's largest restaurant chain. Unlike Starbucks, which has a more premium
positioning, McDonald's focuses on providing low-cost meals. Given it's reach and brand
recognition, McDonald's is a significant threat to Starbucks' growth plans. In 2021,
McDonald's reported $23.223 billion in revenue, a 20.9% increase from 2020. Although
Starbucks has more revenue in 2021 ($29.061 billion), its net income was lower than
McDonald's ($4.199 billion vs. $7.545 billion). McDonald's focus on franchising and
diversified low-cost menu items give it a competitive edge over Starbucks.

f. Publics
The company is an advocate of Corporate Social Responsibility (CSR) movements. In
the context of CSR, Starbucks account to the demands or interests of stakeholders,
because the company is viewed not just as an organization for profit, but also a citizen of
society. Public relations plays a major part in how Starbucks has expanded across the
globe. Starbucks uses social media sites such as Facebook, Twitter and Instagram to
create a digital dialogue with its customers. 'My Starbucks Idea site was created, which
allowed customers and employees to interact and suggest ways of improving the
company's service and products.

VI. Strength and Weaknesses

Strengths
● Wide range of coffee-products sold through the company's retail
operations
Starbucks stores offer a broad selection of regular and decaffeinated coffee
beverages in both US and international markets. It also offers a variety of fresh
food items, including healthier choice selections focusing on high-quality
ingredients, nutritional value and great flavor. Starbucks operated 8,832
company-operated stores and 7,803 licensed retail stores worldwide as of
September. It has enriched the company's reach, catered to a wider customer
base and met their diverse needs efficiently.
● Research and development capabilities leveraged to strengthen product
The core strength behind Starbucks' brand is the quality of its products. The
company has a strong research and development team which is responsible for
the technical development of food and beverage products and new equipment. It
enable them to focus on relevant product innovation, expansion and leveraging
of its existing products and sales channels.
● Great market distribution
Starbucks is well positioned to increase its revenues, customer's base, and profit
margins through its expanded presence in international markets. Starbucks
currently operates in more than 50 countries.
● It has strong ethical values, commitment to the environment, and
community activists
 Weaknesses
● Product recalls by Starbucks affect margins and brand image
Starbucks has recalled a few of its products in recent times. Product recalls hurt
the value of the Starbucks brand and lead to a decline in the demand for its
products.
● Starbucks has a reputation for new product development and creativity
They remain vulnerable to the possibility that their innovation may falter over
time, and product acceptance will come to a halt eventually slowing growth
● Downward turn in economy
With people being practical, more conscious of their spending habits, they may
prefer less expensive options which Starbucks clearly is not.
● Higher coffee prices compared to competitors
Starbucks aims for consumers in high income brackets. Their products' prices
are more suitable for middle class people. These can be their disadvantage
against the competitors which have products with reasonable prices.

VII. The Market

A. Market size
In 2022, the brand opened 1,878 new stores, closing the year with 35,711 stores in over
80 countries. Starbucks serves 300 million consumer occasions per week across 86
markets in channels outside of its retail stores. As of January 2023, Starbucks has a
market cap of $123.59 billion. This makes Starbucks the world's 107th most valuable
company my market cap.
B. Market needs
The customer market is rapidly evolving. Coffeehouses should adapt to their changing
needs such as earth-conscious, Instagram-shunning, quality-orientated and
convenience-oriented products. According to UK-based consumer intelligence firm
Brand watch, one of the biggest challenges for the food and beverage industry is staying
up to date with customers' wants and needs. They state, "The food and beverage
industry is seemingly one of the most susceptible to changing trends, micro-trends, and
local trends.
C. Market trends
Every year, the way consumers enjoy coffee and interact with coffee business continues
to shift as different priorities emerge. The competition is tough and most cafes have their
own gimmicks to lure in caffeine addicts. According to Esquires Coffee, the top trend
predictions for 2023 are aesthetic coffee shop interiors, sustainable coffee and
conscious consumers, more milk alternatives, better tea options, and coffee subscription
boxes.

VIII. Marketing Objectives

• Sales increase
• Market share growth
• Targeting new customers
• Enter the new market, locally and internationally
• Launch new product or service
• Build brand awareness
• Improve external and internal communication

IX. Marketing Strategies

Products/Services
Starbucks has made a profit in excess, beside that, the reputation of Starbucks has built up
mainly due to the quality of products and services. Its brand image itself is made through its
main product which is coffee. The consistency of the product taste and the quality assurance is
what makes Starbucks keep moving. Communication also builds everything together. They also
have a Loyalty Program. It is a way to reward customers who buy their products. Customers are
given stars as part of the Starbucks rewards program. Customers who earn stars receive free
coffee and products. Aside from free treat on their birthday there are also bonus reward such as
double star a day and access to exclusive games and offers.

Target Market
Starbucks markets to both males and females in a wide age group of 22 to 60 years, with a
focus mostly on urban and suburban centers. The target market is relatively affluent – middle to
upper class– as well as educated, socially aware, active and busy. Usually the young people
are the regular customers of Starbucks.

Brand Positioning
The company’s positioning strategy is customer-based, giving more than what the customer
needs. Besides producing great coffee, it promotes a good reputation to its target market
through excellent store ambiance, environmental protection and social commitment. Starbucks
can be located in different big cities. It’s relevant because of the customers, they will not be able
to notice the branch or it will not be known if it’s hidden or if it’s located in the wrong place and
the target market will not be reached.

Pricing strategy
Starbucks sells their coffee at least 25% higher than the other brands. It offers its customers
exceptional drinks and food, charges more, and the people are willing to pay. Starbucks is a
master of employing value based pricing to maximize profits, and they use research and
customer analysis to formulate targeted price increases that capture the greatest amount
customers are willing to pay without driving them off. Starbucks claims the price increase is due
to rising labor and non-coffee commodity casts, but with the significantly lower costs already
improving their profit margins, its seems unlikely this justification is the true reason for the hike
price.

Distribution Strategy
One of the ways the company manages to distribute its products through office coffee
distributors. The company is also considering expanding the retail business by raising its market
shares, this is in its current market together with starting stores in fresh markets where they get
the opportunity. It’s one of the ways that they find it easy to reach their customers. There are
three main modes of transport used by Starbucks Company. Air; motor; water. Each transport
mode has its advantages. Air for way faster transport, motor allows the company to transport
the product anywhere to land and water, it's cheap but carries bulky products.

Advertising and Promotional Strategy

Starbucks uses a large variety of channels to market their product from social media to TV
spots and ads. It's their mix of meting media that makes their brand recognizable, and it's the
consistent message that comes across every time that makes them stand out. All of that
promotion isn't cheap. The mix of the marketing media makes them stand out. They also have
campaigns; the Starbucks Product-Based Campaign. The company promotes unique fan-
favorite beverages. They publish relevant news for their customers with products. Starbucks
Corporate Social Responsibility-Based Campaign. Using social change as marketing tool,
Starbucks position itself as inclusive and open minded, it’s to support LGBT+ community.
Community- Based Campaign. It’s the empathy on highlighting communities individuals relying
on storytelling to depict acts of kindness.

X. Tactical Implementation

This section includes the tactical implementation of the Starbucks Company. There are ways to
improve the marketing methods of the company. This will tackle the tactics and the operating
details of Starbucks.

Advertising
Tactics Operating Details Time Table

Paid Online Promotion Look for some popular

celebrities that are fit to the
role of promoting the
company online.

Implement a Billboard Choose the location for

maximum marketing impact.
The billboard with the
company's products and
foods grabs the attention of
the people who see them

Affordability

Tactics Operating Details Time Table

Discounts By offering discounts to the

first timer customers, it could
 increase the possibility that
they might come back to the
café.

Loyalty Card The company can launch

loyalty cards for the
customers who regularly go
to the café. By the use of the
cards that collect points to
every transaction, it will help
the customers to get free
products or foods. The loyalty
card is an addition to the
existing promos of Starbucks.

Business Development

Tactics Operating Details Time Table

Build Small Branches Even in small cities there are

people that can afford
Starbucks. Building small
branches in small cities helps
the café to be known to every
corner of the word, kot just to
the popular cities. The small
branch will eventually grow.