This essay critically evaluate the marketing strategies of Starbucks by using several marketing theories like SERVQUAL model , Gap analysis , Marketing Mix, PESTAL analysis , SWOT analysis , Strategic Grouping , Porter's five forces , Porter's generic strategies and Ansoff Matrix.
Starbucks
Customer Service
Delivery
MC 6061 – Service Marketing
1/2/2020
,1.0 Introduction 2
1.1Financial highlights of Starbucks 2
1.2 Contribution of Starbucks toward the USA economy 2
1.3 Economic Stability of USA 3
2.0 Service Quality of the Starbucks 3
2.1 SERVQUAL model 4
2.1.1 Critical evaluation 4
2.2 Gap Analysis 6
3.0 Marketing mix – Starbucks 8
4.0 Report to Board of Directors 13
4.1 Executive Summery 13
4.2 Corporate Strategy 13
4.3 Environmental Analysis 13
4.3.1 External environmental analysis 13
4.3.2 Internal environmental analysis 15
4.4 Competitor Analysis 17
4.5 Marketing objectives 18
4.5.1 Financial objectives 18
4.5.2 Marketing objectives 19
4.6 Marketing Strategy 19
4.6.1. Market Segmentation 19
4.7 Competitive Advantage 20
4.7.1 Porter’s five forces analysis 20
4.7.2 Porter’s generic strategies 21
4.8 Marketing Strategy 22
4.8.1 Ansoff Matrix 22
4.8.2 Specific marketing programmes 24
4.9 Implementation 27
4.9.1 Budget 27
4.10 Monitoring and Controlling 27
5.0 e-services and areas to be improved 27
6.0 Feasibility of Investment 29
6.1 Mega-brand vs customer intimacy 29
Reference List
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,1.0 Introduction
Today with more than 31,000 stores operating in 78 markets around the globe, Starbuck is the
premier retailer of specialty coffee. It was founded in 1971 and ‘’ to inspire and nurture the
human spirit - one person, one cup and one neighborhood at a time” is the mission of company.
They are engaging in selling handcrafted coffee, tea and other beverages and a variety of high-
quality food items through their stores. In addition to their flagship Starbucks Coffee brand, they
sell goods and services under the following brands: Teavana, Seattle’s Best Coffee, Evolution
Fresh, La Boulange, Ethos, Starbucks Reserve and Princi (Annual Report, 2018).
1.1Financial highlights of Starbucks
Majority of revenues generated from its operated stores and licensed stores across the globe.
According to the fourth quarter of fiscal 2019 and its “Growth at Scale” agenda, the company re-
aligned its operating segment into two leading growth markets as the US and china. However
currently they are reporting their financials under three segments by including the Channel
Development segment which sells consumer packaged and foodservice products through
distribution agreement with Nestle. U.S is the most matured market and has achieved significant
scale. It indicates 9 % growth in Q4 FY 2019, primarily driven by 6 % growth in store sales and
607 net new store opening over the past 12 months while International Segment records net
revenue of $1.6 billion in Q4 FY 2019 and 1,337 net new store openings. However, Channel
Development segment declined by 6% compared to previous quarter in Q4 FY 2019 due to the
change in ownership and foodservice businesses to Nestle.
1.2 Contribution of Starbucks toward the USA economy
Being a founded place Starbucks makes a significant contribution to US economy in many ways.
Operating financial performances indicate a positive growth compared to previous year in US
region. They have paid an average global effective tax rate of roughly 33 percent, well above the
18.5 percent average rate paid by other large US companies. According to the annual report in
year 2018, there are 17,454 companies operated and licensed stores located in US. Majority of
US Starbucks partners are women and it is recorded as 68 % of total partners in US. Furthermore
according to Global Social Impact Report of Starbucks’ food donation program for alleviating
hunger, global farmers fund to make sure farmers have an access to low-interest financing ,
NextGen Cup Challenge to eliminate single-use plastic straws , Greener Stores and Greener
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, power concepts for saving power are main programs which lead to economic well-being of US.
In addition to this Starbucks’ has invested $ 21.7 Mn in farmers loans ,trained 52000 coffee
farmers , opened 13 community stores , hired youth who are out of work and not in school and
graduated employee through Starbucks College make positive impact on US economy.
1.3 Economic Stability of USA
According to the World Economic Outlook report U.S economy was booming and surging stock
market due to the “dot.com bubble” during period from 1998 to 2001. Bubble was created by
purchases made by many companies and individuals to make sure their software as Y2K
complaint. However this bubble was bursted and it had created sharp drop in economic activity
in year 2001. Terrorist attack was taken place worsen this condition further and it hit bottom on
October 2002 (Amadeo, 2018). In same year Starbucks has planned to open approximately 1200
stores and opened stores in Germany, Greece, Indonesia, Mexico, Oman, Puerto Rico and Spain.
However economic stability of USA in late 2002 is sensitive to effective and efficient operation
of Starbucks’ as a retailer who depends upon consumer discretionary spending. The U.S.
economy is currently emerging from a period of considerable turmoil (Amadeo, 2018). As a
result of that most of citizens are not feeling any better off due to non-improvement of their
income after recession. Therefore, customers may have less for discretionary purchases and
reduce their purchases or switch to competitor’s low priced products. In addition to that
improved unemployment rate, bankruptcies taken place, increased fuel /energy costs, higher
interest rates /exchange rates, limited accessibility to credits and trade disputes also lead to
downturn in the restaurant industry. Not only restaurant industry but also most of business and
producers are set back by the ongoing trade war between US and China (Foster, 2019).
2.0 Service Quality of the Starbucks
Starbucks is facing a significant and increasing competition with respect to the product quality,
innovation and service convenience, such as delivery service and mobile ordering and price.
Therefore, it is important to ensure service quality of the Starbucks for gaining competitive
advantage.
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