Discuss about the Marketing Management for SWOT Analysis.
Marketing management is important as the success is significantly dependent on overall marketing programs and strategies. The aim of this report is to assess the micro- and macro-environment of Starbucks to understand and evaluate real marketing problems of Starbucks. This report shall aid to formulate marketing plan based on the SWOT analysis conducted for Starbucks.
Background of Organisation
Starbucks is one of the largest coffee chain retailers in the world. The organization was established in Washington by Jerry Baldwin and Gordon Bowker. The company sells high quality coffees, tea, snacks and other food and beverages (Starbucks.com 2017). The company aims to achieve product innovation and high quality services for long-term customer retention. Starbucks targets the customers based on their habits. They target upper class, educated and wealthy people who can afford the products and services of Starbucks. The company operates in 66 countries and has a strong worldwide presence with 22,000 retail stores (News.starbucks.com 2015). They have grown rapidly in the US and expanding in other international locations to increase revenue (Starbucks.com 2017).
Starbucks faces intense competition from direct and indirect competitors. A few direct competitors are Costa Coffee, Caribou Coffee and Highlands Coffee as coffee is the core product for it. These coffeehouses have premium services and facilities to provided maximum customer satisfaction. A few indirect competitors for the firm are McDonald’s, KFC and Dunkin Donuts who sell similar other products owning significant market share. These companies have been providing consistent food standard and offer varieties of soft drinks at lower prices (Mathe-Soulek and Roseman 2014).
A SWOT analysis is conducted to review the internal environment of Starbucks as shown in Table 1.
· Premium quality coffeehouse chain
· Strong financial performance
· Strong growth and high market share
· Dominant position in the worldwide market
· Effective people management
· High dependence on coffee business
· Consumers unwilling to pay hefty prices
· Lack of unique products
· Accusation of violating fair trade principles
· Weak presence or force in countries except US
· Global expansion of supplier network
· Introducing new products and co-branding
· Technological opportunities such as CD-burning service
· Expansion of retailer stores
· Expansion in emerging markets
· Rising prices of coffee beans
· Intense competition from local and specialty coffeehouses
· Disruptions in supply chain
· Change in tastes and consumer preferences
· Trademark and copyright infringements
Table 1: SWOT Analysis
Source: Created by Author
The main strength of Starbucks is that it is a premium coffeehouse chain despite the presence of fast food chains. The products sold at the store are excellent in nature. The intangible qualities such as high quality and brand image give it a dominant position in the global market (Starbucks.com 2017). Starbucks has a strong financial performance that helps it bag the number one spot for coffee retailer in the global market. The quarterly growth of 2015 was 5% or more (News.starbucks.com 2015). The company operates in 66 countries and has a strong worldwide presence with 22,000 retail stores (News.starbucks.com 2015). It values its workforce that makes the company a respected employer. According to the Fortune magazine, Starbucks is the fifth most admired company in the world where employees are happy to work (News.starbucks.com 2015).
Starbucks has high dependence on the coffee business as it is the core product. Hence, the price of coffee beans determines profitability. The consumers are unwilling to pay hefty prices for a cup of coffee that deters plenty of customers (Wahba 2016). Starbucks is known for its products such as Frappuccino, big chocolate chip cookies and pumpkin spice lattes. However, other competitive companies sell similar products that make it difficult for Starbucks to sustain in the competition. It is necessary for Starbucks to diversify its product range (Lopez 2013). Starbucks has been previously accused for violating fair trade principles an impoverishing one third of the world farmers. Further, it has also been accused of violating tax payments in UK (Levitt 2015). The brand may have a strong foothold in US, both Middle East and Asian countries has a weak presence or force (Bond 2012).
The supplier network can be expanded to diversify the sources of inputs and not be dependent on a few suppliers. The company can also be less sensitive and be resilient against supply chain risks. As Starbucks has a strong brand image, it can introduce new products as it shall be perceived of the highest quality (Starbucks.com 2017). Also, co-branding strategies can maximize the value. For example, if Starbucks co-brands with McDonald’s, consumer value can be maximized. Starbucks has a strong presence in US and it has an opportunity of expanding in emerging markets such as India, Singapore and others. The network of retailers can be significantly expanded so that greater consumer segments can be captured. There are technological opportunities to create differentiation like the company created a CD-burning service where customers could create their own music CD (Gürhan-Canli et al. 2016).
Starbucks faces threat from the rising prices of coffee beans that adds to supply chain risk and profitability. Starbucks also faces intense competition from local and specialty coffeehouses and it is difficult to maintain a loyal clientele. The cheaper alternatives such as McDonald’s and Dunkin Donuts can affect Starbucks directly. The changing tastes and consumer preferences can leave Starbucks afloat as they target a specific market. If the consumers choose to shift from tea and coffee to other beverages, it shall be a loss for the company. Starbucks has fought litigation against those misusing its brand and famous logo. It is beset with trademark and copyright infringements from the rivals (Starbucks.com 2017).
Although Starbucks has been leading the coffee industry, but it has been showing downward trends in market share and revenue. The competitors such as Caribou Coffee, McDonald’s and others have been implementing marketing strategies successfully. Starbucks needs to utilize its business opportunities to sustain in the market.
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Lopez, A. 2013. How Regional Coffee Chains Are Competing With National Heavy Hitters Like Starbucks. [online] Forbes.com. Available at: https:///forbes/welcome/?toURL=/sites/adrianalopez/2013/10/21/how-regional-coffee-chains-are-competing-with-national-heavy-hitters-like-starbucks/&refURL=/&referrer=/ [Accessed 24 Feb. 2017].
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Starbucks.com, 2017. About Us | Starbucks Coffee Company. [online] Starbucks Coffee Company. Available at: https://www.starbucks.com [Accessed 24 Feb. 2017].
Wahba, P. 2016. Starbucks raising prices to cover higher coffee costs. [online] Fortune.com. Available at: https:///2016/07/12/starbucks-prices-coffee/ [Accessed 24 Feb. 2017].