marketing

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Starbucks opened in 1971 as a single coffee shop in Seattle’s Pike Place Market. The company in its current form began in 1982 when Howard Shultz, now Chairman, joined as director of retail services and marketing. Shultz scaled up the import and distribution of fine coffee and identified new purpose of coffee houses, combining some of the atmosphere of Italian espresso houses with American values of friendly, efficient service. The first of this new style of coffee shop was opened in downtown Seattle in 1984.

By 1990 Starbucks had 84 stores around the US During the 1990s it continued to expand and entered significant distribution relationships with a number of large US retail, air travel and hotel chains. with hopes of creating a “third place” between home and work. Starbucks was created to produce premium coffee, while adhering to various core principles during economic growth. It extended its brand to encompass other aspects of the coffee shop experience, such as selling CDs of the music played in its stores as well as ground coffee and related products for home consumption. Customers are able to socialize, read, study or enjoy music while drinking coffee. Starbucks strategically positions each store with hopes of matching the specific location, helping to create a unique atmosphere

Starbuck Strategy:

Starbucks is committed to remaining in the premium coffee and premium service industry. So to gain their goals they have to study the market very carefully to find out what threats they going to face it in the future. Starbucks uses SWOT analysis and the Five Forces framework to help it reach its objectives. This is a strategic planning tool. It helps the business to focus on main issues. SOWT is the first step of planning and looks at the Strength, Weaknesses, Opportunities and Threat involved in a project or business venture.

Strength and weaknesses are an internal aspect which means that they are controlled by the business such as finance, manufacturing and marketing. Opportunity and threats are external factors. This means that they are outside the control of the business such as the economic situation and environment.

Starbucks SOWT analysis:

Strengths

1- A strong and global coffee brand with more than 16,000 coffee shops in 50 countries world-wide

2- A strong concept by offering a wide range of premium coffee with high quality

3- Committed workforce, one of Fortune Top 100 Companies to Work for

4- A strong financial foundation

Weaknesses:

1-The size of its global business could make it hard to control the standards and quality.

2- The products are expansive compared with the same product from other competitor.

Opportunity:

1 - Starbucks are very good at taking advantage of opportunities. In 2004 the company created a CD-burning service where customers can create their own music CD.

2- New products and services that can be retailed in their cafes, such as coffee equipment (cups and mugs)

3- `Home delivery` takes the advantage and start to deliver the coffee.

4- The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge.

Threats:

1 - No one can know what will happen in the future about the coffee concept, maybe the next generation will stop drinking coffee and they will prefer healthy drinks such as juices rather than coffee.

2- According to researches, 12% of people who quit smoking stopped drinking coffee as well. This research shows how many customer will be lost.

Starbucks is a very well-knowing global brand with thousand coffee shops around the world. In order to improve performance, it must evaluate the external and the internal factors. This will reveal the main opportunity it can take advantage of and it threat must deal with. Also it will help the company to use the strengths points and to reduce the weaknesses points.

Michael Porter's Five Forces Model:

The five forces framework identifies the five most common threats faced by firms it their local competitive environment and the condition under which of these threats are more or less likely to be present (Hesterly W.Barney J,2006). And these threats are:

The Threat of New Entry:

New entrants are firms that have either started working in an industry or that they will start it soon. in Starbucks situation , the entry barriers for the coffee industry is relatively low, even for premium coffee like Starbucks. Any medium or large well‐funded company where capital can be potential entrants.

The Threat of Rivalry:

The second threat in the five forces framework is rivalry, the intensity of competition among a firm's competitors. Starbucks is facing a real problem of rival competition because of its uncompetitive price all over the world and even in its local market. Other coffee chains, such as Dunkin' Donuts provide a good quality coffee with fewer prices than Starbucks.

The Threat of Substitutes:

The third threat in the five forces framework is substitutes. The product provided by competitors meets the same customer need in the same way as the product or service provided by the firm itself. Starbucks is facing a real threat of substitution from many other companies that producing the same product that is satisfying the same need. This is in its local market and even in the international market specially Europe and Middle East. Moreover, no one can know what will happen in the future about the coffee concept, maybe the next generation will stop drinking coffee and they will prefer healthy drinks such as juices rather than coffee.

The Threat of Powerful Suppliers:

Suppliers can threaten the performance of firms by increasing the price of their supplies or by reducing the quality of those supplies. In Starbucks case, there is no much bargaining power for coffee bean suppliers because of the importance of Starbucks’ business to any individual supplier, and the fact that Starbucks probably accounts for a large percentage of any individual supplier’s sales.. This gives Starbucks the ability to choose the price of coffee bean sales. However, There is more bargaining power for suppliers of technological innovations such as automated coffee machines because there are not as many suppliers for such equipment as there are for coffee beans.

The Threat of Powerful Buyers:

The final threat in the five forces framework is buyers. Buyers can affect on the firm by decreasing the firm's revenues. In Starbucks case, buyers used to pay more money for premium coffee such as Starbucks. So there was not much bargaining power. But with the new competitors who provide a premium and high quality coffee the bargaining power of buyers became a serious threat.

BCG Matrix:

The Boston Consulting Group (BCG) Matrix is a simple tool to assess a company’s position in terms of its product range. It helps a company think about its products and services and make decisions about which it should keep, which it should let go and which it should invest in further.

And it is divided into four sections :

stars: The case of high growth, high share of marketing . Stars using large amounts of cash. Star leaders in action. Therefore, it must generate large amounts of cash. Because of the dramatic increase of Starbucks sales and the huge growth of stores number around the world, Starbucks stand on this part of the matrix.

Cash Cows: The case of low growth, high share of marketing. In this case profit and cash generation should be high. Because of low growth, investments needed should be low.

Dogs: Low growth, low market share.

Question Mark: High-growth, low market share. Question mark with the worst qualities of cash from all directions, because of its high demands, then the low returns, because of low marketing quotas.

CONCLUSION

الاستماع

قراءة صوتية للكلمات

 

القاموس - عرض القاموس المفصل

اسم

موقف

منصة

وقوف

مقاومة

منضدة

توقف

منبر

مجموعة أشجار

انتصاب

كشك لبيع الصحف

موقف السيارات

قفير خلية نحل

فعل

تحمل

وقف

ترشح

واقف

ابتعد

قاوم

أوقف

أبحر في إتجاه معين

ظل قائما

إتخذ موقف

تراجع

كان في موقف

أطاق

اصطف

In the end, Starbucks has a good and unique strategy which allows it to reach goals and targets; it aims to go beyond profitability and reputation. Using these tools above helps to be successful in this industry and continue moving in the right track.

Naif Alrawaf

ID: ARNAP02

 

القاموس - عرض القاموس المفصل

اسم

موقف

منصة

وقوف

مقاومة

منضدة

توقف

منبر

مجموعة أشجار

انتصاب

كشك لبيع الصحف

موقف السيارات

قفير خلية نحل

فعل

تحمل

وقف

ترشح

واقف

ابتعد

قاوم

أوقف

أبحر في إتجاه معين

ظل قائما

إتخذ موقف

تراجع

كان في موقف

أطاق

اصطف


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