The Role of Marketing at Starbucks Coffee International

THE ROLE OF MARKETING AT STARBUCKS COFFEE INTERNATIONAL
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The Role of Marketing at Starbucks Coffee International
In order to come up with an effective marketing strategy, Starbucks Coffee International has to analyze its internal and external environmental factors. This is achieved using analysis tools such as; SWOT analysis, PESTLE analysis and Porter’s Five Force Models. In turn, the findings can be used to devise appropriate strategies that would enable Starbucks to achieve its objectives.
The PESTLE (Political, Economic, Social, Technological, Legal and Environmental) analysis would be relevant in assessing the external factors affecting the performance of Starbucks Coffee International. This is because it provides detailed information on the level of threats or opportunities which the organization stands to face from the macro-environment. In turn, the evaluation provides findings which are necessary for the purposes of decision making and strategic planning (Gillespie, 2007). In terms of political factors, Starbucks is faced with markets that are regionally integrated and developed infrastructure. The integrated markets are an opportunity to Starbucks since the increase its potential market base globally. When governments develop infrastructure within their country’s boundaries, they provide an incentive for the company to expand. This can be achieved easily since Starbucks would be able to reach its suppliers and consumers with ease (Wrigley & Lowe, 2014). However, the company faces bureaucratic red tape in most developing countries. This makes it difficult to access new markets in such regions and hence, it creates a threat to the company’s expansion.
The company is also faced with economic factors which have the potential to either limit or expand its operations globally. These factors include; increasing labor costs, high growth rate of developing countries and decreasing unemployment rates. With declining unemployment rates, most people have access to income. It is this income that enables them to be customers at Starbucks Coffee and generate revenue for the company. Also, there is more revenue available in the markets as more countries develop. These two factors create an opportunity for Starbucks to tap and fully exploit. However, the increasing labor costs imply that the firm has to spend more when paying its suppliers. For instance, in the event that coffee bean farmers demand more pay, the firm has to appropriate compensate them so as to retain its suppliers (Roper, 2012). This increases its expenditure (cost of production) and is perceived as a threat to the performance of Starbucks.
The social factors influencing Starbucks Coffee environment involve; widespread coffee culture, increasing number of the middle class and the growing rate of health consciousness. For a fact, Starbucks has increased its provision of a variety of healthy products (Simon, 2011). As such, health-cautious consumers are attracted to the shops which sell Starbuck products. Over time, there has been an increase culture of coffee consumption. The coffee lovers like it specially brewed and designed for them according to their preference. This provides an opportunity for the firm which is specialized in providing specialty coffee for all globally. Moreover, with more middle-class individuals, the company is able to maintain and expand its consumer base. This is because majority of its consumers are persons who belong to the middle-class. Consequently, the social factors in the macro-environment provide opportunities for Starbucks Coffee International to improve its performance.
Another factor is the technological environment surrounding the business. In recent times, there has been technological advancements which make work easier. Consequently, the advancements in technology have resulted to the development of specialty coffee making machines, increased mobile purchases and the ability to transfer technology to farmers easily. The company has taken advantage of the existing technology to develop and improve mobile applications which connect it to the consumers. In turn, this increases the level of purchases and ultimately its revenue. Advanced technologies for farmers’ use enable the company to improve the efficiency of its supply chain. Work is made easy given that transactions are simplified and done over a short period of time. Conversely, the increased availability of specialty coffee making machines is a threat to the performance of Starbucks (Yuksel, 2012). This is because the company risks losing its clients who may resolve to making their own coffee in the event that they purchase the relevant machines.
The environmental or ecological factors which affect the operations at Starbucks include; support for environment friendly products, requirement for responsible sourcing and the recent trend which advocates for business sustainability. With the increased focus on businesses that cause minimal environmental impact, Starbucks has increased opportunities. This is because it causes minimal environmental harm and thus, operation of the firm has gained acceptance with the society (Li, 2017). Moreover, the company practices corporate social responsibility which is an essential factor in responsible sourcing. It also has sourcing policies which further enhance its opportunities in terms of ecological factors. Additionally, by offering most of its products in packages that are recyclable, the company ensures that it acts according to the increasing trend of supporting environmental friendly products. Consequently, this aspect of the PESTEL model ensures creation of opportunities for Starbucks Coffee International.
The final aspect in the PESTEL analysis is the legal factors facing Starbucks Coffee. The company is required to effectively address factors such as; regulation of GMO products, product safety regulations and laws on increasing employment. As a company, it is required to satisfy the laws regarding product safety and those concerning ingredients that are genetically modified. Particularly, it is essential to address the issue of Genetically Modified Organism (GMO) ingredients and ultimately products because there are countries which bun consumption of such. Currently, the company has satisfactorily addressed the two in relation to the laws of the countries where it operates. However, the firm is yet to tackle the legal issue of employment regulations. This is the case especially in developing countries which have set restrictions to the access of their labor markets. In turn, the major coffee provider experiences difficult times when penetrating the local labor markets. Where it accesses the local labor market, Starbucks is forced to increase its expenditure on the available human resources. Eventually, this poses a threat to its performance in the different global markets. Evidently, most of these macro factors provide an opportunity for Starbucks to improve its performance and thrive. However, there are factors which provide setbacks that are a major threat to the company. Hence, all these factors require to be continuously addressed appropriately.
The SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is relevant in evaluating the internal factors affecting Starbucks Coffee International. Currently, the company is the largest coffeehouse business globally. This has been attributed to its abilities to effectively manage its widespread operations while controlling the weaknesses that are a threat to the company’s development. This analysis evaluates the strengths of Starbucks so as to identify the opportunities it has. Also, the company’s weaknesses are evaluated to give the possible threats of the company (Helms & Nixon, 2010). This provides an outline that allows for establishment of strategies that would maximize the company’s strengths and opportunities while minimizing its weaknesses and threats. Starbucks internal strategic factors include; its already established strong brand image and diversification of products. Majority of the coffee consumers know about Starbucks and its high quality products. As such, they would constantly want to identify with the company. This is achieved by regularly consuming the firm’s products. In turn, this creates a constant and growing loyalty which is enhanced by the increasing number of clients who want to identify with the popular Starbucks brand (Tu, et al. 2012). The fact that it has diversified its products by acquiring subsidiary businesses such as Seattle’s Best Coffee and Ethos Water is strength. This is because such factors increase its market base and consequently reflect increased revenues. Additionally, these business subsidiaries contribute to the company’s supply chain. The result is an extensive supply chain that is global and hence serves many clients. It is these strengths that have significantly contributed to the company’s popular brand and high rank in the coffee industry.
Conversely, this popular company has weaknesses that may hinder its progressive growth. The main factors that are an internal weakness to Starbucks Coffee International include; its high pricing strategy, products that can be easily imitated and generalizing the standards of almost all its products. The company sets high prices for all its commodities (Mason & Goza, 2017). This prices keep increasing as time goes by. In effect, the high prices make Starbucks products accessible to only a few people within the society. In this regard, the high prices prevent a high number of middle-income and low-income earners from purchasing the products. As such, they lower the potential market base of the products and ultimately reduce the revenue levels that would have otherwise been realized. Another weakness is the fact that Starbucks has generalized standards for its products. This factor make the products offered to be less aligned with the tastes and preferences of some consumers. As such, it fails to adequately cater for the different culture demands existing in the coffee market. Further, the company has failed to develop unique products with time. This is evidenced by the nature of its current products and coffee ambiance which can be easily be imitated by individuals and competitors. As a result, the company has to increase its innovativeness in order to effectively deal with this existing weaknesses.
As a global company, Starbucks has more opportunities to diverse its operations and markets. There are areas where it has not yet established its presence compared to other areas such as the USA. Starbucks should take advantage of such potential new markets, particularly the Middle East, Asia and Africa. These are areas which have dense populations that can be consumers of Starbucks products if appropriately approached. The fact that some of these regions such as Asia have high economic growth rate is an opportunity which the company needs to tap so as to improve its benefits. In order for the company to keep up with the increasing competition and gain a competitive advantage, it has to increasingly diversify its products (Behar,2007). For a fact, the company has already diversified its products. However, it need to do be innovative, do further research and come up with more products that are appealing to its customers. This would create a highly diversified product mix for the global company which serves a variety of consumers. Another str...