1. Running head: MARKETING PLAN 1
H. Wayne Huizenga College of Business & Entrepreneurship
NOVA SOUTHEASTERN UNIVERSITY
Course: Marketing Decisions for Managers
Marketing Plan for Starbucks
2. MARKETING PLAN 2
Tables of Contents
1.0 Executive Summary……………………………………………………………………………. Page 6
2.0 Situation Analysis…………………………………………………………………………...…. Page 7
Industry Classification
Capabilities
Industry Analysis (Competition Assessment)
2.0 Situation Analysis (Cont.) ……………………………………………………………….…… Page 8
Rivalry Among Existing Firms
The Bargaining Power of Buyers
Threat of Substitute
Bargaining Power of Supplier
2.1 Market Summary……………………………………………………………….……………...Page 10
Size
Growth/Trend
2.2 SWOT Analysis…………………………………………………...……………………….…. Page 11
Strength (Internal)
Weakness (Internal)
2.2 SWOT Analysis (Cont.) ……………………………………....…………………………….... Page 13
Opportunities (External)
Threats (External)
2.3 Competition………………………………………….………………………………….……. Page 14
VRIO
Dunkin Donuts
2.3 Competition (Cont.,) …………………………………………………………………………. Page 16
McDonalds
2.4 Product Offering……………………………………………………………………….………Page 17
2.5 Distribution………………………………………………………………………………...…. Page 19
3.0 Marketing Strategy……………………………………………………….…………………….Page 20
3.1 Objectives………………………………………………………………………………………Page 21
3.2 Target Marketing……………………………………………………………………………….Page 22
3.3 Positioning……………………………………………………………………………………..Page 23
4. MARKETING PLAN 4
Marketing Plan for Starbucks
1.0 Executive Summary
Starbucks is preparing to launch a healthy and hearty meal selection to its menu. The meal
selection will target health conscious individual and differentiate the company from its major
competitors. The first menu will include three meals, garlic shrimp, southwest salad, and lemon
chicken, all of the ingredient will be organic. Starbucks can use social media to reach segmented
consumers, in addition, Starbucks can start recycling its coffee beans to take advantage of the
growing trend of environmental conscious millennials. Starbucks will remain to focus its strategy
to target students, white collar professionals such as doctors, nurses, lawyers, corporate
executives within the average age of 42. Marketing should also be focused or geared toward the
latest diet trends, whole wheat, flour-free and sugar-free foods. Even though Starbucks will
spend more money on acquiring organic products, its return on investment will immediately
show by gaining new and loyal customer base. Marketing budget will be increased from 13% to
15% in order to create demand. Our primary financial objective is to increase earnings by
19.86% and increase market shares by 2%. This increase in earning will offset the costs
associated with purchasing organic products.
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2.0 Situation Analysis
Industry Classification
Starbucks is in the restaurant industry with the focus of specialty Eateries. According to an
article by National Restaurant Association, the restaurant was accounted for $683.4 billion in
sales, and 13.5 billion employees in 2014. Although Starbucks is in the restaurant industry, their
main focus is specialty eatery products such gourmet coffee, espresso drinks, and other
beverages, account for about 40 percent of specialty eatery revenue.
Capabilities
Starbucks uses the generic strategy of differentiation by providing its customers with products
and services that are perceived as valuable and different. In 2013 Starbucks raised their beverage
price by an average of 1 %. While some may not notice the price increase, Starbucks third-
quarter net income rose 25% from $333.1 million to $417.8 million. Hence, the cost for green
coffee is decreasing. By raising their price of coffee by an average of 1%, Starbucks was able to
increase their profit by 11%. Starbucks exercises competitive intelligence by not competing with
Dunkin Donuts’ low price; Starbucks separates itself from Dunkin Donuts by reinforcing their
top quality image of the brand and product. Starbucks maintains a loyal customer base with
higher-income individuals in which perceive their coffee beverages as an affordable luxury.
Industry Analysis (Competition Assessment)
Threat of New Entrant
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Since the entry barriers are not excessive, the restaurant industry is moderately open for potential
new entrants. The amount of capital requirement is very low for this industry. However, this
does not have a significant effect on Starbuck, due to its robust established brand and consumer
loyalty.
Rivalry among Existing Firms
Starbucks faces many competitions from major rivals. Although Starbucks holds a dominant
position in its industry, there are many competitions from rivals such as Dunkin' Donuts Brands
and McDonald’s. Although Dunkin’ Donuts and McDonald’s price are low, Starbucks holds the
competitive advantage base on its brand identity, specifically in the coffee market.
The Bargaining Power of Buyers
Starbucks' customers have a relatively low bargaining power. Most of its purchases are coffee
and snack items that does not carry enough weight to heavily influence buyers in the industry.
Due to low switching cost, Starbucks faces a very high bargaining power of buyers.
Threat of Substitute
There are a vast amount of alternative food and beverages consumers can switch too.
Alternatives are restaurants and juice bars such as Italian restaurants offering authentic
cappuccino and juice bars serving vegan and cold pressed juices. Threat of Substitute is very
high due to competition within the green juice industry and the wide variety of authentic
restaurant chains.
Bargaining Power of Supplier
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Power of suppliers is weak due to Starbucks ability to choose from a wide variety of potential
suppliers. Since Starbucks is a major customer for most of its suppliers, their bargaining power
drastically decreases.
2.1 Market Summary
Size
Starbucks Corporation is one of the most known coffee shops worldwide, expanding their
innovation with technology have allowed them to keep up with the latest trend. Starbucks total
store count is 19,767 ranging from the United States to Poland. Starbucks headquarters is
located in Seattle, Washington. Starbucks operates in various locations such as roasting and
distribution in Amsterdam, Netherlands and manufacturing in Rancho Cucamonga.
Growth/ Trend
At the end of the 2014 fiscal year, Starbucks added 1,599 stores worldwide to increase its
international footprint. This effort boosted revenue by 11% (More than $16.4 billion). During
that year, its adjusted earnings per share (EPS) grew 21%. Starbucks growth has been beyond
coffee, in 2012 Starbucks purchased Bay Area Bakery La Boulange in order to expand their
menu. In addition to food items, Starbucks is also starting to expand its early evening customer
base by offering wine, beer, and small-plate appetizers after 4 p.m. in selected location.
Refer to figure 1 to view Starbucks growth chart
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Figure 1: Starbucks Growth Chart
Staying aligned with the current market trends will increase Starbucks growth possibilities. Some
market trends include:
1. Nitro Coffee: the result of cold brew coffee infused with nitrogen gas. This enhances the
taste of coffee and give it a creamy look.
2. Specialty coffee: there is a huge demand for high-quality and expresso- based beverages.
This demand is projected to increase in 2016.
3. Combination Beverages: A combination of coffee and tea is maturing in the Asian countries.
This combination is projected to grow in popularity.
Refer to table 1.1 for market segments, customer needs and possible strategy
9. MARKETING PLAN 9
Table: 1.1 Market segment analysis
Market Segment Type Customer Needs
Behavior View a comfortable and familiar
experience regularly
More Couch setting location and continue
to greet customers as they come in.
Demographic Age 16-30 white collar and student More locations with drive-thru for On the
go coffee and snack
Psychographic Mid-higher income, young
optimisms mindset
Individuals that focus on staying trendy
and is not heavily influence by price, offer
differentiated items regularly
Geographic High density and high foot traffic
area
Universities, and heavily populated
shopping plaza
2.2 SWOT Analysis
Strength (Internal)
1. Customer Service: Starbucks is globally known as one of the world’s largest coffee
chains. The company’s name and logo, in addition to their “Starbucks on every corner”
their strategy have enabled them to take over local markets. Starbucks is well known for
their loyalty to their customers, reputation for selling fine products, and excellent
customer service with a strong mission and ethical values. Starbucks is committed to a
role of environmental leadership in all facets of their business. Starbucks created a
website called “MyStarbucksIdea.com,” which allows the company to obtain their
customer’s opinions on any ideas or strategies to improve the company overall.
2. Differentiation from other coffee shop: Starbucks offers beer and wine within a few
coffee shops in major cities. This effort is a great opportunity to increase consumer
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diversity and increase profit production for years to come as most coffee shops do not
offer these beverage options.
3. Technology/ Social Media: Many of the young generations are looking for a warm and
inviting place to relax and connect with others. Starbucks caters to that segment by
creating a social hub for younger generations, such as college kids or the after-hours
social drinkers.
Weaknesses (Internal)
1. Price: the price of a 20-ounce cup of Starbucks coffee is approximately $2.25 and a 20-
ounce cup of coffee from Dunkin Donuts is $1.95. While Starbucks is known for their
quality, they are also known for their high priced coffee. Their high prices have created a
competitive disadvantage with small coffee shops. McDonalds holds a price advantage
over Starbucks by offering a premium any size cup of coffee for $1.00. Coffee prices are
increasing exponentially. If prices continue to increase, Starbucks will have no other
choice but to increase their prices.
2. Food selection: Starbucks offers a small selection of snacks in addition to its beverages.
However, competitors like Dunkin Donuts and McDonalds have a wider selection of food
on their menu which includes breakfast, lunch, and dinner. This gives consumers the
choice of having coffee with a full meal, instead of only a snack. With competitors like
McDonalds and Dunkin Donut offering larger selections of food, Starbucks is faced with
a competitive disadvantage of having a limited food selection to go along with coffee.
3. Promotions / Discount: While competitor Dunkin Donuts offers military and police
discounts, Starbucks is losing traffic from consumers that serve in the government
branch. With a “10 percent all year round discount and a 20 percent discount for veteran
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appreciation in the month of May”, Dunkin Donuts can gain a customer base with
individuals that support the US military and law enforcement officers (Veterans
Advantage, 2010).
4. Bundle offer: Starbucks main competitor, Dunkin Donuts, offers bundle deals for its coffee
and along with snacks. A “Box o’ Joe” contains ten 10 ounce servings, equivalent to ten
small cups of Starbucks coffee, making it less expensive for a crowd to bundle and share
coffee. This equates to a competitive strength for Dunkin Donuts, while illustrating a
weakness for Starbucks. Starbucks’s lack of bundle deals could inhibit group gatherings
due to their lack of bundle deals and high costs.
Opportunities (External)
1. Increase demand: The demand for coffee in China and India drastically increased in the
past couple years. China and India will give Starbucks one of the greatest opportunities
for growth. China and India are the two most heavily populated countries in the world, with
a combined estimated population of over 2.5 billion. Starbucks has an opportunity to
expand its stores in China and penetrate the market in India. India’s Gross Domestic
Product (GDP) and Gross National Income (GNI) is expected to grow within the next two
years.
2. Carbon footprint: More people are becoming environmentally conscious; hence Starbucks
has the opportunity to “go green.” By recycling coffee grounds, Starbucks can reduce it
carbon footprint and increase its image by exercising good corporate citizen.
Threats (External)
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1. Trade barriers: Governments influence the trade on coffee beans by setting tariffs and
quotas. These trade barriers increase the price of imported coffee beans thus, restricting
the amount being imported. In addition to taxes, Starbucks may be subjected to pay both
domestic and international taxes.
2. Crowded market: Due to the increasing demand of coffee and the high entry rate, the
market is increasingly becoming saturated. New entrants are focusing their attention to the
fast pace millennials who are constantly on the go. This threat can lower Starbucks’ market
share in the industry.
3. Price increase: After two-and-a-half years of declines, green coffee prices increased by
1.6% in April 2015. Brazil is the largest producer and exporter of coffee beans,
accounting for 33% of total production. Brazil is currently experiencing their most
catastrophic droughts in 80 years. This may cause a dramatic increase in coffee bean
prices. Starbucks will have to raise its prices in order to cover the cost of coffee.
2.3 Competition
VRIO
Starbucks
Starbucks currently holds a competitive advantage, while consistently exemplifies an above
average firm performance. Starbucks serves coffee and other products that are of value to high-
income and loyal customers. The brand image of Starbucks is very rare; there are only a couple
firms in the United States that holds a stronger brand image than Starbucks. The brand image of
Starbucks is unique resulting in the high cost rate to imitate. Starbucks uses its resources and
capabilities by offering new product mixes to target new segment groups.
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Refer to table 2.1 for VRIO breakdown
Table: 2.1 Starbuck VRIO Framework
Dunkin’ Donut
Dunkin' Donuts’ price strategy is centered on the middle income population. Dunkin’ Donuts
prices are made to be appealing in order to attract a large market share. They focus on selling
regular coffee and breakfast foods that are affordable. Dunkin’ Donut has a rare niche in the
market by appealing to lower income demographic communities. Dunkin’s strategy is easy to
imitate because any new entrants can start selling its coffee at a low cost. By offering drive-thru
services in nearly all of their locations, Dunkin’ Donut is exploiting its capability to gain a
reasonable share of the market that prefers convenience.
Refer to table 2.2 for VRIO breakdown
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Table 2.2: Dunkin’ Donut VRIO
McDonald
Despite Starbucks being a leading coffee provider around the world, they face increasingly tough
competition from large fast food chains. McDonalds entered the coffee beverage market with its
McCafe brand, which offers similar products as Starbucks but at a lower cost to consumers.
McDonald’s brand image holds a high value. McDonald’s is difficult and costly to imitate in
regards to its product, its recognizable brand, its large size and wide scope of resources.
McDonalds has the ability to compete for a greater market share in the industry. In addition,
McDonalds offers strong support to its franchise operations.
Refer to table 2.3 for VRIO breakdown
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Table: 2.3 McDonald VRIO
Recourse of
Capability
Valuable Rare Inimitable Organization
Exploit
Competitive Implications
Brand image Yes Yes No Yes
Sustained competitive
advantage
Service No No No Yes Temporary Advantage
Affordability Yes No No Yes Competitive parity
Although Starbucks has two strong competitors in the industry that focuses to low cost,
Starbucks should avoid going into price wars with these competitors. Starbucks holds the
competitive advantage by having a strong brand image and an impeccable customer service
reputation. In order to sustain their brand recognition and reputation, Starbucks must continue to
differentiate themselves from the competitors.
2.4 Product offering
Starbucks newest offering is the “Fuel Your Day” package which allows consumers to choose
from an array of healthy snacks and a bottle of water.
Refer to table 3.1 for limited offering
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Table: 3.1 product offering
Selected Items Choose from
1 of 24 lunch items sandwich, panini, salad bowl, wrap, or bistro
box
1 of 16 snack items ($1.75 or less)
1 sweet item fresh banana, That's It® Fruit Bar or a
Frappuccino® cookie straw
1 bottled water Ethos® or Hawaiian Springs® where available
Starbuck has four main categories of product line, coffee, tumbler, food, and equipment.
Starbucks product mix consists of various beverages, snacks, and lunches. Its product is the only
thing that brings in revenue, however Starbucks takes pride in its customer service. Starbucks’
main product line and product mix are as follows:
Product Line 1: Coffee Product mix: Ice coffee, Latte, Frappuccino, and Expresso
Product Line 2: Tumbler Product mix: Starbucks Tumbler, Straight Tumbler, Design your own
tumbler, Curve Tumbler
Product Line 3: Food Product mix: Muffin, Croissant, Salad, and Sandwich
Product Line 4: Equipment Product mix: Coffee Press, Coffee Grinder, Espresso Machine,
Coffee Machine
Refer to table 4.1 for menu and pricing
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Table 4.1: Menu and price offering
Starbucks plans to offer a short menu that targets health and environmentally conscious
individuals that’re in need of a hearty meal on the go. This new menu will feature half of
Starbucks healthy choice items. Everything on the menu will be organic and all packaging will
be biodegradable.
Major items will include:
1. Garlic shrimp with whole wheat pasta and whole wheat bread, this item will be served with
broccoli and potatoes.
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2. Lemon Chicken with Indian curried garbanzo beans with lemon, this will be served with
sundried tomatoes.
3. Southwestern fiesta salad with black beans and avocado, this meal will have the option of
adding cranberries and pecans.
2.5 Distribution
One cup of Starbucks coffee can possibly depend on 19 different countries (coffee beans, milk,
sugar, paper cup, etc). Starbucks global hub connects some of the poorest countries with some of
the wealthiest countries.
Supply chain: Massive amount of coffee beans are picked from three main regions (Latin
America, Africa, and Asia-Pacific) and shipped to several of distribution centers. This is then
shipped to one of 48 regional distributions, after the regional distribution, the coffee beans are
sent to a green coffee warehouse. This is where the beans are prepared, manufactured, and packaged.
Once the beans are prepared, they are delivered to Starbucks locations.
Trend Since the trend of getting on the go coffee is growing, Starbucks also use distribution channels
such as retail and grocery stores to sell its package and canned products. This development gives
consumers a chance to brew their own Starbucks coffee and buy canned coffee while grocery shopping.
Refer to figure 2.1 to view supply chain layout
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Figure 2: Starbucks distribution layout
3.0 Marketing Strategy
3.1 Objectives: To enhance Starbucks quality of food and beverages which align with the current
healthy and hearty related trends.
Annual transitioning to implement health conscious products and services offered at Starbucks
will begin in 2014. Enhancing quality health conscious products to consumers will continue to
improve with longevity of Starbucks branding.
2014: Starbucks will partner with Dannon in offering a healthy Ready to Eat, Greek Yogurt
Parfait. This Evolution Fresh product will be the initial implementation of Starbucks healthy
product trend.
2015: With increasing net revenue from Evolution Fresh sales, Starbucks will provide cold-pressed
green juices in order to serve the high percentage of green juice consumers.
2016: Starbucks will focus on summer initiatives by offering a Power lunch consisting of nutritious
foods and beverages specific for lunch.
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2017: Starbucks will focus their transition to a more health conscious movement by
implementing their merger company Teavana. The new Teavana RTD non-alcohol premium tea
will be the foremost factor in targeting the loose leaf tea consumers.
3.2 Target Marketing
Starbucks strategy is focused on keeping up with the latest health and diet trends while
progressively enhancing the quality of their beverages. Their overall consumer target includes a
wide range of men and women from adolescent to adulthood. However, their primary consumer
target is white collar professionals such as doctors, nurses, lawyers, corporate executives within
the average age of 42 and an annual income of $90,000. While, their core customers are
categorized as Young Urban Adults which portray a vast amount of tastes and interests along
with a diverse income. These consumers are more likely to indulge in high priced items to make
a statement, keep up with the latest diet trends such as Starbucks multiple non-dairy options i.e.
soy and coconut milk. They are also likely to coordinate business meetings with their clientele at
the nearest Starbucks taking advantage of their WiFi capabilities.
Their secondary consumers target are blue collar workers such as first responders specifically
law enforcement, firefighters, and paramedics. The work environment and time interval can be
dynamic, varying and tiresome. Starbucks offers a variety of high-quality beverages including
cold brew coffee. Cold brew is essentially brewed for a longer period of time for the increased
stimulus potential, in which these blue collar workers can maintain initiative within their
workplace. The most valuable and steady consumers for Starbucks are students, varying from
grade school to graduate and doctoral programs. Providing WiFi access, food, snacks and a
variety of beverages are specifically targeted to students who spend excessive amounts of time in
the comfortable and steadfast atmosphere of Starbucks. Although teenagers may not have the
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financial capacity to indulge in Starbucks luxuries, middle ages to senior citizens and tourists
compensate for any decrease in revenue during the summer when students are in the non-
classroom setting.
3.3 Positioning
While scientific studies are enhancing the public’s knowledge on the quality of products that we
consume, prices seem to be the foremost attribute to the quality of service. Starbucks will focus
on providing fresh, high-quality ingredients within their foods that meet the health and hearty
conscious community. By providing dairy free alternatives such as soy milk, coconut milk and
fat-free skim milk in beverages will position Starbucks as a cruelty-free, body image positive
corporation.
Starbucks has reached the ultimate level of their points of different (POD) by implementing
innovative technology, exceptional food products and beverages and corporate social
responsibility.
The POD of innovate technology that Starbucks practices is a Reward Card that stores
consumers’ monetary funds, discount offers, past purchases and even an individualized menu for
rapid and easy ordering. Many consumers engage in Starbucks Reward Card which enhances the
company’s points of difference against similar competitors. With over 23,000 stores in over 70
countries, Starbucks has made a global difference around the world on how consumers consume
coffee. Starbucks POD also includes corporate social responsibility, by providing poverty-
stricken individuals and families with goods that have not been sold. Starbucks corporate social
responsibility can be found within their motto:
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It is our vision that together we will elevate our partners, customers,
suppliers and neighbors to create positive change.
To be innovators, leaders and contributors to an inclusive society and a
healthy environment so that Starbucks and everyone we touch can endure
and thrive.
Consequently, another POD for Starbucks are their committing to their powerful business
practices. By the continuation of offering ethically sourced coffee beans, has established their
branding in the coffee industry.
Starbucks points of parity or POP are limited compared to other competitive companies. A POP
that greatly translates to a decrease in Starbucks net revenue are their coffee machines. Starbucks
coffee machines are limited to a single beverage machine, whereas a competitive company such
as Nespresso are multi-beverage machines which are more attractive to the consumer.
3.4 Strategies
Product
Two main entities of Starbucks are high-quality food and various caffeinated beverages. In order
to deliver exceptional quality of consumable products, Starbucks maintain a strict quality control
policy pertaining to their perishable items. Keeping up with the latest diet trends, whole wheat,
flour-free and sugar-free foods are being implemented to create a healthy and hearty lifestyle
initiative. While Starbucks total quality management is consciously fine tuning nourishment health
standards, their reputation for quality coffee beans remains intact. Starbucks have maintained their
reputable standard for superior coffee beans by importing from Kenya, Sumatra, Ethiopia and
Costa Rica. The introduction of dairy free creamer alternatives has enhanced Starbucks status as
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the leading healthy and hearty conscious coffee provider. By developing these health cognizant
alternatives raised the standards for similar coffee related companies while maintaining their
exceptional quality image.
Pricing
Within the healthy lifestyle community, quality and price are transposable. When Starbucks was
initially launched they prided themselves on quality products and services which came with a
luxury price. In order to sustain the same high-quality for their food products, Starbucks offers a
steep price ranging from $8.00 to $10.00 for breakfast and lunch sandwiches, steel cut oatmeal
and egg white alternatives. Additional cost for specialized syrup flavors, extra dairy, and nondairy
creamers range from $0.50 to $1.00 per request. Starbucks offers three beverage sizes throughout
the year, a tall (small), grande (medium), and venti (large) in order to compensate for steep price
ranges. Due to costly seasonal flavors, Starbucks will offer a mini or 4oz size to consumers that
may not want to pay the original price. To include all economic classes, Starbucks also offers
lesser expensive pastries and sweet goods to provide services to the varying middle-class income.
These price fluctuations are justified by highly trained staff that are knowledgeable about beverage
mixtures. A clean and comfortable environment with unlimited WiFi access and complimentary
newspapers will support their prices.
Distribution
Starbucks utilizes a multitude of various distribution channels. The essential channel is a consumer
channel in order to maintain their personalized customer service marketing strategy. By choosing
locations near major intersections for high visibility is the ultimate advantage for the company.
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As demand grows in suburban areas, Starbucks will open new stores in clusters to increase their
competitiveness.
Marketing Communication
By introducing Mobile Pour, an integrated technological delivery software for their consumers,
Starbucks positioned themselves as the ultimate consumer friendly, luxury delivery system.
Starbucks mobile application allows users to order their beverage and food beforehand and pick it
up at an allotted timeframe. By utilizing social media communication networks that target young
urban users; Starbucks is able to market to a greater and broader audience. By engaging in “likes”
and “comments” on the social media Facebook; Starbucks buy one get one promotions enhance
the consumer’s knowledge on the company’s advancements. My Starbucks Reward application
keeps track of the consumer’s purchases by rewarding stars which can be redeemed for future
purchases and discounts. Additionally, consumers are able to transfer money from their bank
account to a Starbucks Mobile Application for in-store purchases, provoking consumers to return
for either additional purchases or future consumptions,
3.5 Marketing Mix
Below are annual action strategies that will begin in 2014 and will continue subsequently. The
implementations will target transitions to a more health-conscious image.
2014 Projection
A new portfolio of delicious and nutritious Evolution Fresh ready to eat Greek Yogurt
Parfait products will be co-created by Starbucks and Dannon. This Dannon product will
be for exclusive distribution in the United States. Starbucks will begin offering these
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products in the spring 2015 which will expedite a healthy and hearty initiative throughout
the upcoming years.
2015 Projection
Due to the green juice health trend, Starbucks will offer Evolution, a cold-pressed, high
pressure processed (HPP) green juice. It is made from more than a pound of green
vegetables consisting of 10 grams or less of natural sugars per eight fluid ounce serving.
Flavors include Sweet Greens and Lemon, Essential Greens with Lime, Organic Sweet
Greens and Ginger and Smooth Greens. An Evolution Fresh survey revealed that 43
percent of people in the U.S. have tried green juice.
2016 Projection
With the economy improving, many are ready to go back into the workforce. Women are
now seeking higher degrees and executive positions within their field. As summer
approaches, a quick and healthy meal maybe the answer. Starbucks will launch a Power
Lunch which the consumers can mix and match products of their choice. This will
include choosing 1) A choice of a sandwich, salad or bistro box, 2) A bag of chips,
popcorn, or pretzels ($1.75 or less), 3) A banana, that’s It® Fruit Bar, or Frappuccino®
Cookie Straw. and 4) each lunch also includes a bottle of Ethos® Water, all for $8 (while
supplies last, and no substitutions other than listed).
2017 Projection
Starbucks will be partnering with Anheuser-Busch in implementing the new Teavana RTD
non-alcohol premium tea beverages across U.S. channels. The new RTD product line will
integrate the handcrafted nature and epicurean flavors drawn from Starbucks and Teavana.
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Starbucks brought Teavana in 2013 and has retained their reputation for high quality loose
leaf tea rich with antioxidants and health benefits.
3.6 Marketing Research
By identifying key competitors within the coffee industry such as McDonalds and Donkin
Donuts, Starbucks can research their healthy and hearty beverages with low calories and low-fat
food options. Starbucks has the ultimate leverage against their competitors since they do not
have to reform their negative image like Dunkin Donuts and McDonalds. Starbucks has always
had a positive health conscious images among consumers within the industry. Research will be
used to continuously improve the quality of Starbucks health conscious foods and beverages in
order to sustain their consumer’s positive body image lifestyle.
4.0 Financials
Forecast
Following the launch of the healthy and hearty menu, Starbucks earnings are projected to
increase by 19.86% from last year’s earnings. This projection is influenced by trend and an
anticipated drop in coffee prices by 3.07%. Total sales revenue is projected to be $21.4 billion at
the end of the fiscal year 2016. Q3 will account for be $5.3 billion and Q4 will account for $5.7
billion Annual Earning Per Share (EPS) is Forecasted at 1.89.
Refer to figure 3.1 to view revenue projection
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Figure 3 Revenue Projection
Coffee price decline: ($126-$130)/$130=3.07%
To increase demand, 15 % of gross revenue will be allocated to marketing efforts. This will
include activities such as, advertising, sales promotion, relation public.
Refer to table 5.1 for marketing budget
Table 5.1: Marketing Budget
Projected Revenue $ 5,336,000,000.00 $ 5,200,000,000.0
Allocated
Percentage
Advertisement on television $53,360,000.00 $52,000,000.0 1%
Radio Advertisement $80,040,000.00 $78,000,000.0 2%
Newspaper Advertisement $106,720,000.00 $ 104,000,000.0 2%
Billboard advertisement $106,720,000.00 $104,000,000.0 2%
Movies and shows product placement $240,120,000.00 $ 234,000,000.0 5%
Internet Advertisement $160,080,000.00 $156,000,000.0 3%
Magazine $53,360,000.00 $52,000,000.0 1%
Total Expenditures $800,400,000.00 $780,000,000.0 15%
Operations
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In regars to operations a forecast of $8 million is is schedule to be allcocated in the first quarter,
$6.7million for the second quarter, $6.3million for the third quarter and $5.9 million for the
fourth quarter.
Refer to table 5.2 for operations
Table 5.2 Operations
5.0 Control
Starbucks will monitor progress towards goal achievement and taking corrective action when
progress isn’t being made. The company will use bureaucratic control, market control, and clan
control. Starbucks uses bureaucratic control by creating employee handbooks to cover rules,
policies, expectations, and standards. The market control will be used to regulate independent
business units, reports, and record of financial for each quarter of the year; market controls will
analyze profits and losses. Finally, the clan control is the corporate culture, beliefs, values, and
the informal relationships within an organization.
5.1 Implementation
With increasing poverty, we will donate 100% unsold food to participating U.S. stores. Food
Share has partnered with Starbucks in donating about five million meals to less fortunate
Operating Schedule Q1 Q2 Q3 Q4
Store operating
expenses
$(5,411,100.00) $(4,638,200.00) $(4,286,100.00) $ (3,918,100.00)
Other operating
expenses
$(522,400.00) $(457,300.00) $(457,200.00) $(429,900.00)
Depreciation and
amortization expenses
$(893,900.00) $(709,600.00) $(621,400.00) $(550,300.00)
General and
administrative expenses
$(1,196,700.00) $(991,300.00) $(937,900.00) $(801,200.00)
Total $(8,024,100.00) $(6,796,400.00) $(6,302,600.00) $(5,699,500.00)
29. MARKETING PLAN 29
(homeless, starving) individuals and families. If this initiative is successful, there is a possibility
of reaching over fifty million less fortunate (homeless, starving) and families by the year 2021.
Thus, increasing our corporate social responsibility (CSR) image. By doing this, we will exceed
the PESTEL factors in which we operate in.
5.2 Marketing Organization
Starbuck’s marketing department is led by Sharon Rothstein which holds the role of Executive
Vice President, Global Chief Marketing Officer. She is responsible for the company’s portfolio
of emerging brands, which includes, Seattle’s Best Coffee, Evolution Fresh, La Boulange, Tazo
and Teavana. Sharon leads the marketing team in developing Starbucks image in the retail stores
and Channel development; the team focuses on marketing initiatives, creative expressions,
advertising, and key business partnerships. Sharon is also responsible Digital Marketing team
and Global Category Brand Management. Sharon’s marketing team is broken down into six
different groups: Television Advertisement, Radio Advertisement, Newspaper Advertisement,
Billboard advertisement, Movies and Shows Product Placement, Internet Advertisement, and
Magazine Advertisement.
The company has a functional structure, geographic divisions, and product-based divisions.
Starbucks global marketing is delegated to Vice Presidents, Andy Adams, Kris Engskov, and
Cliff Burrows. Starbucks’ product-based divisions in its organizational structure. Addresses
product lines. The four main categories of product line are coffee, tumbler, food, and equipment.
By focusing on this aspect, Starbucks will effectively develop and create its products with
support from its organizational structure.
30. MARKETING PLAN 30
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