Analysing the strategy of Starbucks

The Starbucks corporation is one of the major corporations in America. It was founded in 1971 in Seattle, Washington(Starbucks Corporation, 2016). The Corporation is regarded as the top roaster, marketer, and seller of premium coffee in the entire globe. The Corporation has approximately 20,000 employees across all of its 19,767 company-operated and licensed stores scattered throughout roughly 62 countries across the world (Starbucks Corporation, 2016). The company’s product mix includes roasted premium coffee, a variety of fresh food items, tea, and various beverages, among other things, most of which are food-related (Starbucks Corporation, 2016). Starbucks holds a license for its trademark through other channels where it can also sell its products for instance through groceries, stores, and national foodservice outlets. Additionally, according to Starbucks Corporation (2016), the company also does market its products through various other brand names such as Tazo, Starbucks Refreshers, Teavana, Seattle’s Best Coffee, Evolution Fresh, Verismo, La Boulange, and Starbucks VIA among others.

As mentioned before, Starbucks has numerous of its branches and outlets spread across the world. However, the majority of these outlets are located in countries like the United Kingdom, Canada, Germany, China, Malaysia, Thailand, Taiwan, Mexico, Australia, New Zealand, Philippines, and South Korea (Starbucks Corporation, 2016). Starbucks also sells other coffee and tea related items such as coffee brewers, espresso machines. Mainly the Corporation sells its products through mail-orders and on online platforms for example starbucks.com. Moreover, some other items, for example, are wholesaled to restaurants, institutions such as schools and healthcare centers, airlines, and hotels. The Corporation has also partnered with other companies such as the Coca-Cola and Kraft Food Incorporation. Through its partnership with Coca-Cola, Starbucks packages Frappuccino beverages and DoubleShot espresso which are sold in convenience joints, supermarkets, and drug stores (Starbucks Corporation, 2016). On the other hand, through its partnership with Kraft Foods Inc., it has managed to sell ground coffee and whole bean in mass merchandise stores, groceries, and in clubs.

As from April 3, 2017, Kevin Johnson formerly the president of the Corporation, was announced the Chief Executive Officer (CEO) and Howard Schultz as the new executive chairman (Sisson and Bowen, 2017). The move was to ensure Howard focuses primarily on innovation, development, and design of the Corporation. Since its establishment in 1971 to its 21st-century status, the Starbucks Corporation has tremendously caused a coffee revolution in the entire US and the world yonder (Sisson and Bowen, 2017). As at September 29, 2016, the Corporation had total revenue of more than $16.89 billion.

The Corporation’s Mission and Vision Statement

Mission

The mission statement of the Corporation is “to inspire and nurture the human spirit - one person, one cup and one neighborhood at a time” (Geereddy, 2015). The mission when viewed critically establishes the Corporation as that which is the first class vendor of the world’s finest coffee while maintaining the tempo of business growth and customer satisfaction. As presented by Geereddy (2016), there are six pillars or principles which the Corporation has established as the main drivers of its mission, and they include; creation of good working environment where each employee is treated with respected and is considered a partner in the business, embracement of diversity as a major component of growth, setting high purchasing standards to ensure provision of quality products, roasting and vending coffee at its best state, develop the customers and relationships all at ago, and participate actively in the Corporate Social Responsibilities (CSR) while recognizing that profitability is an essentiality in the future prosperity.

Long Term Objective and Strategy of Starbucks Corporation

The long term Objective for Starbucks is ”to increase the net profit margin to 12.5% and at the same time increasing the profit level by 15% per annum over the next decade” (Geereddy, 2015). The reason for this objective is that the Corporation has experienced myriad challenges mainly financial in the past decades. When Schultz was brought back to Management, it appeared to be a reignited vision to see the Corporation forge forward towards the economic light. The current position of Starbucks is an important indication that the strategic objective and vision set would be realistic if all the management, operations, and marketing factors are kept constant.

Starbucks Positioning

Currently, the Corporation has positioned all its main brands like those of quality (qualitative) and high esteem (highly esteemed). During the early days when the company was started, there was little competition especially from new entrants as well as from similar or related products. However, today the company is operating in a highly competitive environment, and it is therefore very important that it establishes itself as an upscale brand mainly through the stores and the services it provides. Through this, the corporation will create a mental perception among its customers that it is the best among the rest. One major characteristic among the customers of Starbucks is esteemed and highly valued socialization. The company, therefore, has to ensure it provides the venue for the customers to realize valued socialization. Mainly, the company is a place for students who gather, hang out or study. Starbucks has realized that customers are the base for positioning strategy. The company has thus invested heavily providing excellent services to customers to achieve a competitive edge in the market full of similar businesses.

Marketing Opportunities Undertaken by Starbucks

There are some marketing opportunities which Starbucks has exploited in the past two years to realize profitability and market dominance. However, there are two main opportunities which have highly been used compared to the rest and they include; mobile order and pay and Starbucks roasteries and reserve brand.

Profitability of the Marketing Opportunities

Mobile Order and Pay is one major marketing opportunities which the corporation implemented in the last two years and which according to its strategic reports, is considered an important driving wheel in achieving the marketing goals and profitability. Although during the early days of its rollout, Mobile Order and Pay there were some hiccups reported by the company. The new service is essential as it allows the customers to place orders for the products they want using their Smartphones and only come to pick. Already close to 8% of the Starbucks customers are using the service and it is believed it will be helpful in helping the customer service department and enhance profitability. The digital flywheel is an innovation which establishes customers’ relationships and increases sales too.

Apart from the Mobile Order and Pay service, there is also the Starbucks Roasteries and Reserve brand which according to many, is viewed as the most electrifying growth initiative at the company. The initiative is that which has helped Starbucks be on track and compete favorably with the rest of the independent cafes. The innovation is projected to increase the annual returns by 15-20% thereby doubling stock. It is thus, also a profitable venture taken by Starbucks management.

Organisational achievements and effectiveness of Marketing Strategies

Starbucks as a corporation has put a lot of emphasis on some marketing strategies to remain dominant in the coffee business. A significant stress, for instance, has been placed on the Mobile App, an innovation which has since paid off generously to the company. The Mobile App marketing strategy which facilitated Mobile Order and ay services was rolled out in 2015, and the corporation has witnessed 21% of all transactions in the US alone take place through the App, an indication of its effectiveness.

Besides the Mobile App, Starbucks has also embarked on brand marketing as a strategy to promote its products among the targeted consumers. In this scenario, word of mouth is used to promote the brand among target customers. Normally, customers appreciate the presentation of Starbucks coffee shops; the elegant furniture, soft music in the background, visual arts with images of coffee cps among others. Starbucks has managed to connect with the cultures of the areas it sets up new coffee shops. The cultural nature of the company, therefore, is another important reason for the choice of its brands among most customers thus an organizational effectiveness.

Legislation and Codes of Ethics

Legislation and codes of ethics are important aspects which must be respected by any business to continue being in the market. Starbucks is not an exception regarding this. Concerning sales practices and advertising, Starbucks communicates with the customers as well as the potentials consumers of its product most truthfully and accurately. The corporation ensures it sells only quality products and does not disparage its competitors. Additionally, Starbucks ensures there is fair competition in the market. Legislation of competition assures businesses of vigorousness in marketing their products in a free market. Starbucks, therefore, has to comply with all the laws of marketing importance. For instance, the corporation; does not discuss production, pricing, or markets with its competitors, does not act in a manner likely to exclude the competitors from the market, and does not contract a third party to compromise an existing market agreement.

References

Geereddy, N. (2015). Strategic analysis of Starbucks Corporation.

Sewer, A. (2009). Fortune Magazine.

Sisson, D. C., & Bowen, S. A. (2017). Reputation management and authenticity: A case study of Starbucks’ UK tax crisis and ”# SpreadTheCheer” campaign. Journal of Communication Management, 21(3), 287-302.

Starbucks Corporation. (2016). Business ethics and compliance. Standards of business conduct. Retrieved on 24 August 2017 from www.starbucksromania.ro/.../Business-Ethics-and-Compliance-eng_tcm72-11290.pdf