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Marketing Strategy of Starbucks
BusinessManagementMarketing

Starbucks Marketing | Marketing Strategy of Starbucks

by Shamsul

 

Starbucks Marketing | Marketing Strategy of Starbucks

 

Founded in 1971, this famous coffee-based chain; Starbucks was initially in the business of retailing, roasting whole bean and coffee, tea, and spices. Starbucks Marketing is very effective and currently, it is operating in 70+ countries and has become very successful in making connections with its customers across the global network of 24,000+ retail stores.

Important Factors in the Marketing Strategy of Starbucks:

Targeting, Positioning, and Segmentation:

 Starbucks uses a combination of demographic and geographic strategies for the segmentation of its particular offerings for its customers. A selective targeting-based strategy is being used in geographically separated 70+ countries for its product, Costa coffee. This strategy has helped the company to cater needs of its customers and introduces various new products according to the demand.  This coffee chain has positioned itself as a value-based company; it creates an imaginary stimulus through intangible offerings with their main product.  Its mission is to nurture and inspire the human spirit, one cup, one person, one neighborhood for one time.

Competitive Advantage | Starbucks Marketing

Backward integration of this supply chain was to control the roasting, packaging, purchasing, and coffee distribution around the world while maintaining the taste and quality of its coffee in the world market.

BCG Matrix | Starbucks Marketing

 It’s being worldwide famous and a business experience over 3 decades has helped this company to develop better business understanding and innovate new methods with changing market. All of its products are the stars in the BCG analysis matrix.

Distribution Strategy | Starbucks Marketing

 As a roaster, retailer, and marketer dealing with the world’s best coffee chain, it provides an offering of beverage products with the help of its various company-owned or different licensed stores across the globe. It also provides its variety of trademark tea and coffee products in grocery and different supermarket or store chains across the world.

Brand Equity | Starbucks Marketing

 This brand is not only limited to coffee but also sells services and goods under different brand names like Tazo, Evolution fresh, Ethos, and Teavana. Its involvement in various CSR activities since the brand’s inception has helped the brand to connect with across-the-world communities. Company ethical believes have helped it greatly in retaining through talent nurturing and various won awards and a position of the most admired American company in its home country, according to fortune 2015.

Competitive Analysis | Starbucks Marketing

 Competition in the industry is based on basic but important factors like quality, service, price, and convenience. Coffee culture has been picked up in a variety of developing nations and keeps making progress which offers great competition between local, national, and international players. Companies in the coffee business have different types of competitions offered like other restaurants, ready-made packed coffees in grocery or any stores, and prime location specialty stores.

Market Analysis | Starbucks Marketing

Coffee consumption has been growing around the globe at a 2% rate. In India consumption of coffee

Per capita is nearly 85 grams and this value is 6 kg in the US. Developing countries are a great potential investment for any industry/ company.

Customer Analysis

Its customers are usually millennial, 15-45 years age group people enjoying hangouts with family and friends with blended beverage experience offered in different outlets.

 

 

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Starbucks SWOT Analysis 2020 | SWOT Analysis of Starbucks

PESTLE Analysis of Starbucks | Starbucks PESTLE

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PESTLE Analysis of Starbucks
BusinessManagementMarketing

PESTLE Analysis of Starbucks | Starbucks PESTLE

by Shamsul

 

PESTLE Analysis of Starbucks | Starbucks PESTLE

 

In this post, we are going to discuss the Starbucks PESTLE analysis.PESTLE analysis is basically a strategic analysis tool that is really effective to analyze the effect of external problems. Basically, PESTLE analysis is an extended form of ‘’PEST’’ analysis. There are some other types of this analysis tool are PESTEL, STEEPLE, and STEEP. The PESTLE analysis consists of political, economical, social, technological, legal, and environmental factors that help to understand the strategic issues of any company or business.

Starbucks operates in a macroeconomic environment and due to severe economic recession, some companies are struggling badly. Moreover, this kind of recession has changed the purchasing power of the customer. According to recent market research, the consumption of coffee is not reduced despite all the recession. It means that companies can force the consumers to buy these products by providing these products at lower rates. Starbucks also adopting the mobile computing revolution with the collaboration of Apple and also offered discounted coupons. In addition, they are also trying cross-selling and co-branding. In short, Starbucks is trying to take the maximum advantage of Smartphone technology.

Starbucks is also facing different challenges like consumer awareness. Customers in the United States are more concerned about the ethics of the brand they are using. Hence, there are many other factors that are challenging Starbucks. We have organized these problems on the basis of PESTLE factors. In this way, you can understand the factors that impact Starbucks’ business.

 

PESTLE Analysis of Starbucks | Starbucks PESTLE

Political Factors:

Sourcing the raw material is one of the major political factors. This thing has gained a lot of consideration from the sourcing countries and politicians. Due to these factors, Starbucks wants to stick to environmental and social standards. This thing gives the opportunity Starbucks for fair trade practices. Additionally, they should follow the rules and regulations of the countries from where they purchase raw materials. Due to enhancement in political awareness and activism, it is necessary to follow the proper laws and regulations. The impact of regulatory authority is another major factor. There are several multinational companies that are facing scrutiny in the United States. So, Starbucks should watch the political stability or instability of the country. Here are some other factors that also need your consideration:

  • Labor laws.
  • Tax guidelines.

 

PESTLE Analysis of Starbucks | Starbucks PESTLE

Economic Factors:

The current worldwide economic recession is another major impact for the company. As we mentioned above, these factors can create a negative impact on the profitability of the company. This thing can force the consumers to move towards cheaper products. Moreover, the consumption of coffee is not decreased due to these factors, so this can be a big opportunity for Starbucks.

Furthermore, Starbucks should focus on operational charges and increasing labor. The decrease in profits and the inflationary situation can create a negative impact. Here are some important factors that can impact Starbucks:

  • Taxation level.
  • Local currency exchange rates.
  • The confined economic environment in various markets.

 

PESTLE Analysis of Starbucks | Starbucks PESTLE

Social Factors:

There is a problem quality problem in selling cheap products. This thing is not acceptable for consumers at any cost. It is a major social challenge for Starbucks. It can attract lower-income people but it might break the base consumers of Starbucks. The eco-conscious and ethical users are also concerned about the practices of Starbucks. They worry about the environmental and social norms of the company. Starbucks should focus on Gen-Z and millennials in order to increase its profitability. Below, some of the social factors that Starbucks should consider:

  • Consumer choices.
  • A major change in the lifestyle of the people.
  • Educated people in the markets.
  • Changing consumer values.
  • Change in work pattern.
  • Changing family patterns in Europe and the US.

PESTLE Analysis of Starbucks | Starbucks PESTLE

Technological Factors:

Due to the immense revolution in mobile technology, Starbucks has a good opportunity to exploit these technologies. They recently partnered with Apple in order to give app-based discount promotions. What is more? The company also provides Wi-Fi facilities in its outlets. As most of the generation is tech-savvy, so this factor can play an important role in the popularity of Starbucks. So, you can browse sites and upload pictures while enjoying Starbucks coffee. This thing adds some value to the brand and improves the customer experience. The company is also using mobile payment methods and they successfully tried this service in different locations of the United States. Here are some technological factors to focus on:

  • The emergence of new technology.
  • Biotechnology.
  • Advancements in agriculture.

 

PESTLE Analysis of Starbucks | Starbucks PESTLE

Legal Factors:

It is important for Starbucks to follow all the rules and regulations of sourcing markets and domestic markets. They should also focus on caffeine consumption and production. In this matter, they should learn the regulatory laws from the health authorities. Ahead, some factors that can impact Starbucks:

  • Strict trade and customs laws.
  • Licensing regulations.

 

PESTLE Analysis of Starbucks | Starbucks PESTLE

Environmental Factors:

There are several business practices of Starbucks concern global advocacy groups and activists. These activists are not happy with the business practices of Starbucks, so they should focus on these problems in order to retain the customer’s trust. Here are some factors that Starbucks should consider:

  • Strict environmental rules and regulations.
  • Ecological disaster in regions which produce coffee beans.
  • Different environmental problems and global warming.

 

PESTLE Analysis of Starbucks | Starbucks PESTLE

Conclusion:

With the PESTLE analysis of Starbucks, we can prove that Starbucks is really in a good position and a stable company in the competitive market. The main strength of this company is its beverage and food industry. This thing shows that the consumption of these products will never reduce. But, the recession is a major challenge in the entire process because it can change the purchasing power of the customers. So, Starbucks should revise its pricing strategy and focus to deliver reasonable products. It is one of the most important factors that help Starbucks to retain its consumer base. In this way, they can attract new consumers and win the trust of the customers. It means Starbucks has plenty of opportunities to expand its business in terms of popularity and profitability.

 

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PESTLE ANALYSIS and Its Impacts in Marketing

PESTLE Analysis of Starbucks | Starbucks PESTLE

Difference Between PESTEL or PESTLE Analysis

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SWOT Analysis of Starbucks
BusinessSWOT & PESTLE Writing

Starbucks SWOT Analysis 2020 | SWOT Analysis of Starbucks

by Shamsul

 

Starbucks SWOT Analysis 2020 | SWOT Analysis of Starbucks

 

Starbucks is the biggest American coffeehouse chain that works in 31,256 stores across the globe. It is the world’s largest coffeehouse chain, established in Seattle, Washington in 1971. In this post, we are doing the SWOT Analysis of Starbucks.

Starbucks is no longer a coffeehouse but it is more than a coffeehouse and a possible third place between home and work. At present, there are 87k promising drink combinations at Starbucks. The current CEO of Starbucks is Kevin Johnson.

 

Company Name: Starbucks

Founded by: Gordon Bowker, Zev Siegl, Jerry Baldwin,

 CEO: Kevin Johnson

 Year established: 1971

 Headquarter: Seattle, USA

 Number of Employees (Sept 2019): 346,000

 Type: Public

 Ticker Symbol:  SBUX

 Market Cap (Feb 2020): $ 99.59 Billion

 Annual Revenue: (Sept 2019): $ 26.51 Billion

 Profit (Net income) (Sept 2019): $ 3.60 Billion

 

Subsidiaries: Teavana, Evolution Fresh, Seattle’s Best Coffee

 

Products & Services:   Coffee | Handcrafted Beverages | Fresh food | Non-food items | Packaged goods | Mugs and accessories | Gifts

 

Competitors: Costa Coffee | McDonald’s McCafe | Dunkin Donuts | Café Coffee Day | Tim Hortons | Costa

 

 

Did you know?

Around 87,000 drink combinations are available at Starbucks.

Starbucks SWOT Analysis 2020 | SWOT Analysis of Starbucks

SWOT Analysis of Starbucks:

Following is the SWOT analysis of Starbucks.

 

Starbucks Strengths:

  1. Powerful Brand Image:

No doubt Starbucks is one of the most famous and powerful brands in the beverage industry. With a brand value of $11.7 Billion, Starbucks kept growing in size, volume, and the number of loyal buyers.

  1. Powerful Financial Performance:

Starbucks has a powerful financial performance with yearly revenue of $26.5 Billion and a net profit of $3.6 Billion in 2019.

  1. Expansion in Stores:

According to research, the growth in stores of Starbucks has increased from 1886 to 31256 in the middle of 1998 and 2019.

  1. Extensive Global Supply Chain:

Starbucks is well known to have a wide international network of providers. Three coffee-producing areas such as Asia-Pacific, Africa, and Latin-America provide coffee beans to Starbucks.

  1. Possessions:

Recently, the company has purchased the top six companies including Evolution Fresh, Seattle’s Best Coffee, Teavana, Tazo, Torrefazione, and Italia Coffee. These possessions have confirmed pretty victoriously for Starbucks.

  1. Sensible Diversification:

Starbucks also introduces moderate diversification in beverages and food items. In recent times, they introduce ice cubes made of coffee which outcomes in a stronger coffee taste.

  1. Excellence, Flavor, and Standardization:

Starbucks has gained huge popularity in recent times because of its quality blends and luscious coffees. This globally famous coffee company provides ultimate taste, quality, and consistency in its products.

  1. Competence, Calculated Planning, and Reinvestment Plan:

The main strength of Starbucks is its Strategic planning and working efficiency. The company reinvests its incomes in growing its business in various locations of the world. This thing helps a lot of Starbucks to maintain its name and image.

  1. Employee Treatment:

Starbucks treats its employees very well which results in more contented employees serving consumers well. Starbucks is in the list of Fortune’s Top 100 Places to work.

  1. Gender Unbiased Toilets:

Recently, Starbucks introduces gender-neutral toilets to protect LGBT (Lesbian, Gay, Bisexual, and Transgender) society against inequity. This is due to the Anti-LGBTQ bill that classifies against transgender people.

 

Starbucks SWOT Analysis 2020 | SWOT Analysis of Starbucks

Starbucks Weaknesses:

  1. Expensive Rates:

The high prices of Starbucks products are not affordable for working and middle-class people. Their prices are expensive than McDonald’s and other coffee shops. They should revise their pricing policy to make Starbucks even more successful.

  1. Limitation of New Products:

Truly speaking, Starbucks does not possess the most exceptional products in the circle. This can be a weakness of Starbucks because other coffeehouses offer almost the same products such as McDonald’s McCafe and Dunkin Donuts.

  1. Universal Standards for Most Products:

Starbucks provides generalized products all over the world. These offerings are not associated with cultural standards and customer preference.

  1. European Tax Avoidance:

Starbucks had faced a lot of backlash and controversies due to tax avoidance in the UK. Reuters disclose that it did not pay tax on its £1.3 Billion of sales in 3 years.

  1. Procurement Practices:

Most of the social and environmental campaigners criticized Starbucks for their immoral procurement practices. The activist claimed that the company obtains coffee beans from poor third-world farmers. This is against the ‘’Fair Coffee Trade’’ rules.

  1. Recall of Products:

Starbucks recently recalled a lot of in-demand products to its system. This thing has damaged the brand image badly and direct to the loss of the consumer base. Starbucks recalled 2 products such as sausage, egg, and a cheddar breakfast sandwich, and the other was the cheese and fruit bistro box. During usual testing, it was founded that the breakfast sandwiches had the existence of Listeria Monocytogenes on the surface. And on the other hand, some traces of cashew nuts were found on the bistro box. No caution label shows the existence of cashew nuts. This could be risky for the community with cashew allergies.

 

Starbucks SWOT Analysis 2020 | SWOT Analysis of Starbucks

Starbucks Opportunities:

  1. Growth in Developing Markets:

Starbucks has a lot of branches in the US. It’s a big opportunity for Starbucks to open more coffeehouse chains in India, China, and a few areas of Africa because these areas can give a great profit.

  1. Business Diversification and Products Specifications:

With diversification, Starbucks can generate great revenue and opportunities. They should develop products according to consumer preferences. This is a great opportunity to make Starbucks more profitable.

  1. Introducing Latest Products:

Starbucks is a popular coffee brand, but introducing new products under its banner would be money-making.

  1. Joint Ventures or Alliances with other Firms:

Co-branding is a helpful tool to make your brand more popular. Starbucks should develop alliances or partnerships with major companies. In this way, they can build up their company and market share.

  1. Gender Unbiased Toilets:

Recently, Starbucks introduces gender-neutral toilets to protect LGBT (Lesbian, Gay, Bisexual, and Transgender) society against inequity. This is due to the Anti-LGBTQ bill that classifies against transgender people.

 

Starbucks SWOT Analysis 2020 | SWOT Analysis of Starbucks

Starbucks Threats:

  1. Contest with Low-cost Coffee Suppliers:

At present, most of the coffeehouses provide reasonable products in the market. This can be a serious threat to Starbucks. So, Starbucks should revise its pricing policy to maintain its customer base.

  1. Competition with Big Outlets:

Multinational companies like McDonald and Dunkin Donuts can also a big threat for Starbucks to steal its fan-base and engagement.

  1. Replication:

Competitors can sell fake coffee and products to damage your brand name and image.

  1. Independent Coffeehouse Movements:

Currently, Starbucks faces many socio-cultural threats. These movements help small and neighboring coffeehouse and resist the development of big multinational companies.

  1. Controversy on California Warning Rule:

In March 2018, a California judge ruled Starbucks and similar companies to mention warning labels on their products. This thing also damages the image of Starbucks.

  1. Philadelphia Arrests:

In April 2018, the Starbucks employees refused 2 people to use the toilets because they didn’t buy anything. This can cause great controversy and these people are arrested at Starbucks. This event also harms the brand name.

  1. Coronavirus Epidemic:

Due to this Coronavirus, Starbucks provisionally closed 2000 stores in China. The total number of Starbucks stores in China is 4123, this means half of them are closed. It will have an unconstructive impact on their financials.

 

Starbucks SWOT Analysis 2020 | SWOT Analysis of Starbucks

Recommendations:

Starbucks should introduce innovative ideas and products in the company to maintain its market share and revenue.

  1. Introduce new products and better services.
  2. Introduce technological advancements in the business.
  3. Address serious issues or problems wisely.
  4. Revise prices and attract more consumers.
  5. Execute creative marketing movements, activities, and strategies.
  6. Donate to community development and participate in CSR and sustainability practices.

 

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