Starbucks’ marketing plan includes a mission statement to position Starbucks as

Question

Starbucks’ marketing plan includes a mission statement to position Starbucks as “the most respected and recognized brand of coffee in the world.” The company’s objective is to achieve sales of $12 billion by 2010. To achieve this goal, Starbucks’ marketing plan calls for growing its U.S. distribution from 7,102 U.S. stores (in 2007) to over 10,000 stores (by 2010) and expanding aggressively in international

What factors should a business include in developing an index of market attractiveness and what factors should it include in an index of competitive position?

Discuss the main roadblocks to Starbucks’ sales objective. Explain how the roadblocks become the key issues in developing a marketing mix strategy.

Explanation / Answer

Market Attractiveness:

Competitive Positioning:

·With different weight, and the relative importance Portfolio Analysis and Strategic Market Plans:

·Portfolio analysis-an evaluation of a business, product, or market with respect to market attractiveness and competitive position as an aid in identifying the kind of strategic plan that would be most appropriate

·Product markets with high indexes for both market attractiveness and competitive position have the strongest portfolio position and the best opportunities for profit performance

·Having a good position usually leads to a strategic marketing plan to invest to protect the product-markets attractive position

When the aim is to grow in existing markets, it is essential to regularly monitor the attractiveness of the market and the organization’s relative competitive strength in order to grow in that market with the existing product range. That's where the Market Attractiveness Index and the Competitive Advantage Index come in.

The Market Attractiveness Index is composed of three factors:

a) Market forces,

b) Competitive intensity

c) Access to customers

Each of these factors is composed of three sub-factors. The market force factor is composed of market size, market growth rate, and buyer power. Competitive intensity is composed of price rivalry, ease of entry, and substitutes available.

Access to the customer is composed of customer familiarity, channel access, and sales force capabilities.

Market with a higher attractiveness index score may give confidence for higher investment. One can estimate the potential for growth or design strategy for growth in existing markets with an existing portfolio of products based on the organizations competitive advantage.

To estimate competitive advantage, we use the Best's Competitive Advantage Index, composed of three factors:

a) Differentiation advantage

b) Cost advantage

c) Marketing advantage.

Each of these is composed of three sub-factors. Organizations are a variant of clustered entities. An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs.

Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual. Individuals in an organizational structure are normally hired under time-limited work contracts or work orders, or under permanent employment contracts or program orders

Starbuck’s retail objective is “to be the leading retailer and brand of coffee in each of their target markets by selling the finest quality coffee and related products, and by providing each customer a unique Starbucks Experience. “ Their strategy is to “expand global retail business to increase market share in a disciplined manner, by selectively opening additional stores in new and existing markets, as well as increasing sales in existing stores, to support long-term strategic objective” as well as having “superior customer service as well as clean and well-maintained company-operated stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty.” Their tactics would be to create new and innovating products to create a loyal customer supporting the strategy.

This is by far the biggest threat that Starbucks faces with the market being at a mature stage, there is increased pressure on Starbucks from its competitors like Dunkin Brands, McDonalds, Costa Coffee, Pete’s Coffee, mom and pop specialty coffee stores. Dunkin Brands had at its main threat in the US market by trailing Starbucks with a 24.6% share.

Price Volatility in the Global Coffee Market: There have be significant fluctuations in the market prices of high quality coffee beans, which Starbucks can’t control. Developed Countries Market Saturation: Starbucks derives a significant amount of its revenue from the development markets and there is increased market saturation currently. Developed Countries Economy: In an increasingly economically integrated world, an economic crisis like the one in 2008 could have a trickledown effect from the developed markets to the developing markets. This threat would hurt revenues for Starbucks as consumers shift away from premium product mix to stay in limited budgets during economic hardships.

Changing Consumer tastes and lifestyle choices: The shift of consumers toward more healthy products and the risk of coffee culture being just a fad represent a threat for Starbucks going into the future.

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