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REPORT ON DEVELOPING MARKETING PLAN FOR PEPSICO IN RESPECT OF (Starbucks)
1.0 TERMS OF REFERENCE (INTRODUCTION)
The aim of this report is to talk about PepsiCo brands specifically the one I have selected which is Starbucks and discuss developing a marketing plan within this report.
PepsiCo is an international food and drink company placed in Purchase, New York, United States. This organisation was made in 1965 with the union of the Pepsi-Cola Company and Frito-Lay. They deal in manufacturing, marketing and distribution of beverages, grain-based snacked food and other products. The PepsiCo brand I have chosen is Starbucks due to their global impact on the coffee industry.
I am going to be using internet sources about PepsiCo and for more references about Starbucks and the impact that PepsiCo has on the brand.
3.1 Rivalry among competitors: Starbucks faces the solid power of focused conflict or rivalry in the nutrition organisation and coffee shop ventures. In the Five Forces investigation prove, this power relates to the impact of contenders on one another and the business condition. The large number of companies is an external factor that intensifies competition. Starbucks Corporation has many different sizes of competitors. In terms of specialty and strategy, the competitor population varies moderately. Such a moderate variety further strengthens the level of competition in the industry in this Starbucks Five Forces analysis.
Threat of new entrants: The Starbucks Corporation faces the threat of new entry. This force suggests the impact of new players or new contestants in the business in Porter’s Five Forces examination display. These outer components add to the moderate danger to Starbucks from new participants around.
Bargaining influence impact on suppliers: The moderate size of individual providers is an outside factor that powers Starbucks to a moderate degree. The large number of suppliers, however, weakens their negotiating power. For example, suppliers have different strategies and skills to compete with each other in order to gain more revenue by supplying Starbucks Corporation with more materials, such as coffee beans.
Bargaining power impact on customers: Buyers’ negotiating power is one of the most important forces affecting the company. Customers can easily move from Starbucks to other brands based on the low switching costs. In addition, the high substitute availability means that customers can stay away from Starbucks if they want to, because there are many substitutes like instant beverages from vending machines. These strong factors overlook the fact that individual purchases are small compared to the total revenue of the company.
Threat of substitution: This component of the analysis of the Five Forces shows that substitutes have a strong potential to adversely affect the business of Starbucks Coffee. The high availability of substitutes makes it easy for consumers instead of Starbucks products to buy these substitutes. For example, substitutes like ready-to-drink beverages, instant beverage powders and purees, and food and other beverages are readily available from various outlets, such as fast food and fine-dining restaurants, vending machines, supermarkets and grocery stores, and small convenience stores.
3.2 – Strengths for Starbucks SWOT Analysis:
A major strength for Starbucks would be how recognised and well known they have become as a global coffee chain. This is a major advantage for the company to stand out against similar competitors such as Costa. The key element for Starbucks is the focus on customer satisfaction. Customers enjoy the atmosphere within stores with features such as free WIFI and rewards or discounts for loyal customers to enjoy. As Starbucks is a global brand you can travel anywhere and still have access to their products.
Weaknesses for Starbucks SWOT analysis: A weakness for Starbucks is that the coffee is not customised to local preferences or tastes this is due to the company’s decision to keep the premium drinks the same in any given region. This is an issue because some may be swayed to competitor products that are personalised to geographical preferences. Another weakness is the premium pricing policy that Starbucks withholds. This policy does not take in to consideration the wages of average workers from low earning countries and whether these customers can afford to pay more for Starbucks products which would persuade them to go to other local coffee shops that sell at cheaper prices.
Opportunities for Starbucks SWOT analysis: Starbucks can access new countries which increases the revenues by choosing to expand in developing markets. Merging markets is a positive source of growth for the company as clients can find Starbucks whilst being abroad and increase brand awareness outside the US. Starbucks has many partnerships with producers in the entertainment industry and this is key opportunity for the organisation.
Threats for Starbucks SWOT analysis: The major threat for Starbucks is the over saturation of the US market as many of their outlets are in the US. Another threat to this is the healthy lifestyle choices that customers are now adapting to and may persuade them to go to other healthier competitors.
3.3. Political Influence: The main policy factor is the supply of raw materials. This has attracted a great deal of attention from Western politicians and countries of origin. The company therefore wants to comply with social and environmental standards. It is ready to follow the procurement strategies. Fair trade practices are important. Another impact is that laws and regulations need to be followed.
Economical Influence: The main external driver of Starbucks ‘ economy is the ongoing global economic recession. This factor dented Starbucks ‘ profitability, as I mentioned earlier. This has led buyers to switch to cheaper alternatives. Starbucks should look for a chance here, as they didn’t stop buying coffee. The company is facing rising labour and operating costs.
Social Influence: Starbucks can offer cheaper products, as specified earlier, but the quality may be lost. This is the most important socio-cultural challenge facing the start-up. The consumer base will be expanded to include buyers from the lower and middle income levels. Consumers of’ green’ and’ ethical chic’ are moreover worried. They are concerned about the brands’ social and environmental costs.
Technological Influence: Starbucks is well placed to benefit from the emerging mobile wave. Its partnership with Apple to provide app-based discount coupons makes it easy to drive the mobile wave. The company has already introduced Wi-Fi in its outlets. For consumers, the Internet is important. They can now surf the web and drink Starbucks coffee while they work. This is the brand’s added value.
In conclusion, Starbucks faces many different threats than can negatively impact the company such as consumer buying behaviour and the losses that come along with that. However, Starbucks still remains as a prestigious coffee chain that is recognised globally although it still faces heavy competition and unfulfilled consumer demands.
In general, depending on the results of this current Porter’s Five Forces analysis, the key objective of Starbucks must be to increase the qualities and related skills of the café business. For example, the organization can depict practices that make its image much more grounded. This proposal is expected to address the concrete power of strong cooperation, the purchaser’s negotiating intensity and the solid danger of replacement. Explicit in the power of rivalry, it is recommended to help the upper hands of Starbucks Business. The company can, for example, improve the variety of its inventory system to increase access to resources and reliability in generation. It is also suggested that Starbucks’ growth promotes the strength to attract more customers and retain them.
- Pepsicopartners.com. (2019). Starbucks | PepsiCo Partners. [online] Available at: https://www.pepsicopartners.com/pepsico/en/USD/PEPSICO-BRANDS/STARBUCKS%C2%AE/c/brand_starbucks?source=brand_pepsicobrands&root=beverages [Accessed 14 Feb. 2019].
- CGMA. (2017). Porter’s Five Forces of Competitive Position Analysis. [online] Available at: https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html [Accessed 14 Feb. 2019].
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