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Starbucks Marketing Plan

MKT 805

Gretchen Klosterman

on 25 January 2011

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Transcript of Starbucks Marketing Plan

Starbucks: Marketing Plan Starbucks' Background Situation Analysis Strengths Weaknesses Opportunities Threats Strategic Market Plan Marketing Mix Strategies Brand Product Price Place Promotion SWOT Analysis Revenue & Profit Plan Marketing Budget Performance Review Starbucks originated in Seattle’s Pike Place Market with a single store
Originally was a roaster and retailer of whole bean and ground coffee, tea, and spices
The company name ‘Starbucks’ is derived from the first mate in Herman Melville’s novel, Moby Dick.
Its logo is inspired by the sea, featuring a twin-tailed siren, a symbol from Greek mythology.
Starbucks’ mission is to ‘inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time’
Currently, Starbucks has more than one million customers in more than 16,000 locations in more than 50 countries.
Today, Starbucks features many different products in its stores including coffee beverages, food, and other merchandise.
Starbucks top three competitors are Dunkin’ Donuts, McDonald’s and Nestlé
For fiscal year 2009, consolidated net revenues decreased six percent
Company-operated retail revenues in fiscal year 2009 declined seven percent
Starbucks is build upon customer experience
Starbucks is considered part of the coffeehouses/donut shop segment
“When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers— even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection.” (starbucks.com)
Starbucks attributes much of its success to its partners (employees) Coffeehouses/donut shop sales have seen a phenomenal amount of growth (primarily the years 2005-2007)
In early 2008, problems occurred
People less likely to buy a cup of coffee costing $4.00- giving McDonald’s and Dunkin’ Donuts a clear advantage
Starbucks has resolved to increase its fiscal 2010 earnings outlook
Starbucks plans to raise their level of competition by opening approximately 300 net new stores in the 2010 fiscal year With Starbucks’ release of a frozen yogurt, we recommend conducting a performance review quarterly
It is essential that Starbucks review and assess both the results metrics and process metrics
Tracked and compared quarter to quarter
It is ideal for Starbucks to examine all four of the market performance metrics because they each measure different areas of the marketing plan Tracking social media is a skillful way of evaluating the success of Starbuck’s frozen yogurt
-Facebook, MySpace, Twitter
-Tracking on a weekly reporting system for the first three weeks
of product launching in order to build and maintain buzz
-After three weeks, tracking and reporting twice
quarterly is ideal.
Track coupons issued for frozen yogurt Example survey questions:
What other Starbucks items do you purchase with the purchase of a yogurt?
How do you feel about the yogurt’s current pricing?
Do you have any flavor recommendations for Starbucks yogurt?
What is your yearly income?
What is your gender?
What is your zip code?
What is your age?
Do you feel Starbucks has a positive image?
How would you change Starbucks yogurt?
Would you recommend Starbucks yogurt? Examining the Starbucks resources on a quarterly basis is also helpful to the company
Have the amount of resources changed?
Can you tap into additional resources now available?
Should Starbucks scale back parts of the plan due to diminishing resources?
International company with strong brand equity -- 9,000 cafes in almost 40 countries
Extremely profitable organization
Fortune Top 100 Companies to Work For in 2005

Large focus on expansion
Self cannibalization
Expensive product pricing
Best option is to enter new market with completely new product to increase revenues and expand market share
Segment attractiveness, competitive advantage and a unique value proposition led us to propose Gelatte, a fat-free frozen yogurt served in Starbucks stores Regular ice cream sales are declining, and organic, healthy desserts are on the rise
High growth potential and increasing consumer demand for more sophisticated food
None of competitors offer frozen yogurt, but the new product puts Starbucks into competition with companies like TCBY, Pinkberry, and Red Mango Starbucks loyal customer base, high level of brand equity and having a variety of products will give the company an edge
Gelatte’s primary target market: 18-34, secondary target: 34-54, due to differing consumer preferences
18-34 year-olds: least likely to drink coffee but most likely to visit coffee shops, enjoy a light & healthy reward at the end of a busy day, purchases revolve around convenience This segment is more willing to pay a premium price for an organic or healthy product
Starbucks must be careful not to abandon current target of older consumers, and should offer flavors to appeal to loyalists
Gelatte will add value to Starbucks overall customer experience Brand franchising
Delveloping other products and services that can be retailed in their cafes
Constantly introducing new products
Competitors: Dunkin Donuts Coffee, Caribou Coffee, McDonald's McCafe line, Biggby Coffee
Market trends - healthy lifestyles
Competition: street carts, supermarkets, other caffeine-based products
Starbucks has a very high brand awareness level among its customers as well as non-customers.

Sub-brands and line extensions benefit from the image of the core brand, and are able to achieve higher levels of awareness at a lower cost.

New product will include Starbucks name – vertical brand extension
Low-fat/non-fat frozen yogurt dessert

“Starbucks Gelatte” – name of the new product

Variety of flavors:
-Fruit-based flavors to satisfy the 18-34 market
who are health conscious, and also to compete
with major competitors Pinkberry and Red Mango
-Coffee-inspired flavors for our current market,
25-54, and also to have consistency with the
Starbucks brand
To stay consistent with the Starbucks brand, Gelatte will be offered at a slightly higher price than similar products

Plus-One pricing strategy – the one advantage Starbucks has over its competition is its brand
Gelatte will be sold exclusively at Starbucks stores

The market coverage is considered selective

Non-traditional indirect channel – Starbucks already has channels
in place, and they are also able to control the quality of the product
with their channel strategy

If Gelatte was offered in other retail stores, customers would
not be likely to pay the premium price
Instill sense of community

The “Starbucks experience”

-Simple, yet directive:
‘Cool off and get cozy with a Starbucks Gelatte’
or ‘We’re just not about coffee anymore.’

-Simple graphics/images will accompany the images
Promotion Timeline
Messaging frequent and
spread over a six-week period
Promotions Print advertising
-Select magazines and newspapers by determining target
market reach

No TV advertisements

In-store displays
-Table-top tent signs, window displays and large-scale
-Visibility of the new product to all customers, and spark
consumer interest.

Promotions Outdoor advertisements
-Billboards, and signage at
airport terminals, bus and
subway stations

Internet advertising
-Banner ads and thumbnail ads
placed on various websites
that are popular to the target
In-store giveaway
-First three weeks of product launch, the first frozen yogurt
topping will be free to every customer
-Free, in-store product samples of Gelatte in all flavors at initial

Measuring effectiveness of marketing campaign:
-In-store survey
-In-store and online (at starbucks.com and on social media sites)
surveys will be offered to customers to complete
Social media – word of mouth, no-cost
-6.8 million fans on Facebook and about 840,000 followers on Twitter
messaging will be implemented before Gelatte’s launch on the Starbucks
social media pages to start community interaction and discussion
-Special coupons and discounts will be offered to social media fans

Social media – advertising, at-cost
-Facebook and Twitter ads

Sales of frozen yogurt rose 10 percent from the years 2004-2009, and sales are forecasted to grow as much as twelve percent from the years 2010-2014

Frozen Yogurt still is a young market – limited data available on industry performance
As the industry we are entering is expected to grow, Gelatte is expected to produce a sizeable amount of revenue for Starbucks.

Although the industry is forecasted to see growth throughout this period, the sales revenue for the new product will see less growth as the years proceed. This is due to less excitement surrounding the product as it will not be in the introduction stage after the year 2011
Revenue and Profit Plan Starbucks spends only 1 percent of its total revenue on marketing expenses

3 percent for year one; 1 percent from projected Gelatte revenue for years two and three

Bottom-up marketing budget approach, designating each marketing task and the amount needed to accomplish each task

At full market share penetration and the possibility of new products being introduced to Starbucks, budget may be reduced further for the Gelatte marketing campaign
Full transcript