Posts Tagged ‘catering’
A company is not just a member of a single industry but it is a part of an ecosystem that crosses a wide range of industries. Despite the coffee chain being in the business for more than five decades, Starbucks ecosystem is still in the early stages of its development. When a company has an advanced ecosystem its products and services are highly compatible with each other and customers will miss out on a wide range of benefits and functionalities if they want to break out of the ecosystem. Think Apple or Microsoft. Starbucks has not been able to develop an effective business ecosystem until now partially due to the nature of products and services the company offers. In other words, the global coffeehouse chain offers limited range of products and services it has not been successful in creating compatibility and dependence between products and services. Recognising the importance of having an ecosystem, Starbucks came up with the idea for digital ecosystem in 2020 as part of measures to deal with COVID-19 crisis. Specifically, Seattle-based international coffee chain is attempting to create digital third place, shifting its third place – a place away from home and work value offering to a digital environment.[1] Development of an effective ecosystem comprises the following four stages – pioneering, expansion, authority, renewal or death. [2] These stages relate to Starbucks ecosystem in the following manner: 1. Pioneering stage. The initial stage is associated with the formation of ecosystem. Starbucks ecosystem at this early stage involves initiating global digital community – a community defined by collaboration, experiences, and shared ownership – all centred around Starbucks coffee. 2. Expansion stage. At this stage ecosystem extends to achieve maximum market coverage and critical mass. The world’s largest coffeehouse chain can extend its relevance to integrate art,…
Starbucks CSR programs and initiatives are led by Michael Kobori, chief sustainability officer for the world’s largest coffeehouse chain. CSR initiatives for Starbucks cover wide range of business aspects and employee relationships such as supporting local communities, educating and empowering workers, gender equality and minorities, energy and water consumption, waste reduction etc. CSR Programs and Initiatives Starbucks Supporting Local Communities Starbucks Community Store program aims to assist local non-profit organizations in their efforts to provide education and training to achieve poverty eradication for the young segment of population. The company plans to open 100 Community Stores by the end of 2025. Starbucks has cooperated with non-profit organizations, community leaders and organizational stakeholders to provide more than 520,000 hours of volunteering service around the globe.[1] The global coffeehouse chain runs FoodShare food donation program in all company operated stores in US and Canada. 10.4 million and 1.2 million meals were donated in US and Canada respectively in FY21. Starbucks Educating and Empowering Workers Starbucks College Achievement Plan is an education program that allows employees to obtain online degrees from Arizona State University. Approximately 2500 employees earned their degrees via this program in FY21 alone It has been noted that “at the height of the global financial crisis, when other companies were cutting HR costs wherever they could, Starbucks invested in staff training, including coffee tastings and courses that ultimately qualified for credit at higher education institutions”[2] In FY21 the company oversaw more than 136000 course enrolments in Starbucks Coffee Academy and more than 55,000 course completions since launch. Starbucks and Gender Equality and Minorities At present about 40% of Starbucks US employees are minorities and 65% are women. Among vice presidents, 48% are women and 15% are minorities. The global coffeehouse chain aims to achieve at least 30% BIPOC…
Starbucks McKinsey 7S model is used to highlight the ways in which seven elements of businesses can be aligned to increase effectiveness. According to this model, strategy, structure and systems represent hard elements. At the same time, shared values, skills, style and staff are soft elements. McKinsey 7S model stresses the presence of strong links between elements. Specifically, a change in one element causes changes in other elements. As it is illustrated in figure below, shared values are positioned at the core of Starbucks McKinsey 7S model, since shared values guide employee behaviour with implications in their performance. McKinsey 7S model Hard Elements in McKinsey 7S Model Strategy Starbucks business strategy is based on product differentiation with the focus on the quality of products and services. Moreover, the coffee chain giant effectively positions Starbucks stores as a ‘third place’ away from home and work, where customers can meet friends, relatives or spent time alone. Currently Seattle-based international coffee chain is positioning itself as a digital third place as well. Technological innovations and intensive integration of technology into various business processes in general and ordering process in particular represent another important aspect of Starbucks business strategy. The launch of Mobile Order & Pay feature, which allows customers to buy without getting in line, the launch of voice ordering app and “sending text message notifications to customers in the Seattle area when their mobile orders are ready”[1] can be mentioned to illustrate this point. Structure Starbucks Corporation has a hybrid organizational structure which combines geographic, brand-based and functional hierarchy structures. Operations are divided into North America (USA and Canada) and International (China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America and Caribbean) divisions. Brand-based divisions, on the other hand, consist of Starbucks, Teavana®, La Boulange®,, Evolution Fresh™, Seattle’s…
Starbucks value chain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage for the global coffeehouse chain. Figure below illustrates the essence of value chain analysis. Starbucks Value chain analysis Starbucks Primary Activities Starbucks Inbound logistics Starbucks inbound logistics and supply chain was subjected to a dramatic restructuring in 2010 after Howard Schultz had returned to the role of CEO for the second time. The restructuring initiative of Starbucks inbound logistics involved simplification of supply-chain management and the creation of a single, global logistics system. Unroasted Arabica coffee beans are brought from Asia, Africa and Latin America to the US and Europe in containers via sea. Also, the coffee chain purchases green coffee beans from multiple coffee-producing regions around the world. These are delivered to one of the following regional roasting plants and distribution centres: Kent Flexible Roasting Plant – Kent, Washington. Augusta Roasting Plant – Augusta, Georgia. Sandy Run Roasting Plant – Gaston, South Carolina. York Roasting Plant and Distribution Center – York, Pennsylvania. Evolution Fresh Juicery – Rancho Cucamonga, California. Coffees are roasted and packaged and taken to dozens of central distribution centres around the globe. Along with coffees from regional distribution centres, central distribution centres also receive deliveries from vendors for a wide range of products starting from coffee machines to napkins. Central distribution centres make more than 70,000 deliveries per week to Starbucks 25,085 stores located in 75 countries.[1] The world’s largest coffeehouse chain also grows its own coffee. Since 2013 Starbucks has its first own 240-hectar coffee farm in PoasVolacno, Costa Rica.[2] Such a shift in the sourcing of products can increase the effectiveness of new product development initiatives for the business as the company will have a chance of experimenting with developing new sorts of…
Porter’s Five Forces analytical framework developed by Michael Porter (1979)[1] represents five individual forces that shape the overall extent of competition in the industry. Starbucks Porter’s Five Forces are represented in figure below: Porters Five Forces Threat of new entrants in Starbucks Porter’s Five Forces Analysis Threat of new entrants in international coffee chain industry is low. The following factors reduce the threat of new entrants for Starbuck’s industry within Porter’s Five Forces. 1. Market saturation. Coffee chain market is highly saturated and more so in developed countries. Market saturation implies an increase of a market share for a specific coffee house at the expense of a competitor. New entrants into the coffee house chain business find such a reality discouraging to enter the business and achieve long-term growth. 2. Access to distribution channels. New market entrants are going to face significant issues to access distribution channels because potentially attractive locations for coffee stores are already occupied by coffee chains, restaurants and retail outlets. It took Starbucks 36 years to reach its current status that comprises total more than 33800 company operated and licensed stores.[2] Similarly, other major players such as Costa, Caribou Coffee,McDonald’s, Dunkin Donuts, Pret-a-Manger have secured thousands of advantageous locations during the decades of operations. 3. Economies of scale. Establishing coffee house chains requires massive capital investments. It can prove to be highly challenging to secure investment to establish new business in this industry unless the business plan is based on previously untapped value proposition. Bargaining power of buyers in Starbucks Porter’s Five Forces Analysis Bargaining power of Starbucks buyers is significant. The following considerations need to be taken into account in this regard: 1. Abundance of choice. Customers can choose from a wide range of established coffee chains as well as local specialty coffee…
Starbucks marketing communication mix consists of communication channels to communicate the marketing message to the target customer segment. The most popular channels discussed below are print and media advertising, sales promotions, events and experiences, public relations and direct marketing. Starbucks Print and Media Advertising Starbucks advertising expenses totalled USD305.1 million, USD258.8 million and USD245.7 million in fiscal 2021, 2020 and 2019, respectively.[1] Print and media advertising represents the core of Starbucks marketing strategy and advertisements attempt to associate Starbucks brand with the superior quality and pleasing experience. Accordingly, messages communicated by Starbucks to the target customer segment via print and media advertising include the following: “Beware of Cheater Coffee. It Comes with a Price” “If Your Coffee Isn’t Perfect, We’ll Make It Over. If It’s Still Not Perfect Make Sure You Are in a Starbucks” “Starbucks or Nothing. Because Compromise Leaves Really Bad Aftertaste” Starbuck began to use social media and viral marketing much earlier than the majority of its competitors with the positive implications on the volume of its sales. Starbucks large social media campaign was launched back in 2009, when US-based customers were offered a free pastry via social media if they purchased a drink before 10:30 am. The marketing initiative announced via social media attracted about one million customers.[2] Noteworthy social media marketing campaigns launched by Starbucks include tweet @tweetacoffee, Blonde Roast, Pumpkin Latte, #TreatReceipt and others. Moreover, social media is adapted by Starbucks as an effective communication channel with customers to develop new products taking into account customer preferences and opinions. The global coffeehouse chain also uses celebrity endorsement as part of its print and media advertising extensively. The list of celebrities who promoted Starbucks include, but not limited to Taylor Swift, Ariana Grande, Rocky Lynch, Jamie Grace, Idina Menzel and Michael Bubble. Starbucks Sales…
Starbucks 7Ps of marketing comprises elements of the marketing mix that consists of product, place, price, promotion, process, people and physical evidence as discussed below in more details. Product Element in Starbucks Marketing Mix (Starbucks 7Ps of Marketing) Starbucks sells coffee, tea and other beverages and a variety of fresh food items, including snack. In addition to its flagship Starbucks Coffee brand, the company sells products and services under the following brands: Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve and Princi. The global coffeehouse chain also sells merchandise products such as coffee- and tea-brewing equipment, Verismo® System by Starbucks, mugs and accessories, packaged goods, books and gifts. Starbucks products are known for high quality. Coffee is the main product sold by company and it sells more than 30 blends and single-origin premium coffees. Place Element in Starbucks Marketing Mix (Starbucks 7Ps of Marketing) Starbucks operates in 84 markets globally and its products can be purchased from the following places: 1. Company-operated stores. There were 17133 company-operated stores, which accounts for about 51% of total numbers of stores by the end of fiscal 2021.[1] Almost all company-operated stores are leased. Starbucks company-operated stores are usually located at high-traffic, high-visibility locations 2. Licensed stores. There were 16700 licensed Starbucks stores by the end of fiscal year 2021, representing about 49% of total numbers of stores.[2] The world’s largest coffeehouse chain offers customers the possibility to order online or through mobile app. Customers can explore the menu, customize their order according to their tastes and preferences and find nearest store location to collect their order. 3. Grocery and foodservice accounts. The world’s largest coffee retailer also sells its products via global leading supermarket chains such as Walmart, Tesco, Sainsbury’s and others. Only the most popular products such as Starbucks Espresso…
Starbucks segmentation, targeting and positioning comprise marketing decisions directed at identifying appropriate group of people among the general public as future customers for the business and targeting this segment via positioning products and services that resonates well with their needs and wants. In simple terms, segmentation, targeting and positioning refers to deciding whom to sell to, and positioning products and services accordingly. Starbucks Coffee uses the following types of positioning: – Mono segment positioning. The coffee chain giant targets premium customer segment only i.e. individuals who are willing to pay extra for the quality of products and services. – Adaptive positioning. Due to the tendency of increasing consumer health awareness, Starbucks Coffee developed coffee beverages with less calories such as Chai Tea Latte (103 calories) Caffe Misto (63 calories) and Iced Americano (11 calories). – Standby positioning. Certain Starbucks beverages such as Frappuchino had to await changes in the market for certain period of time to find demand. – Sustainability positioning. The world’s largest coffeehouse chain attempts to shift customer attention to sustainability aspect of its business. For example, by the end of FY21 there were 2779 Greener Store framework Starbucks branches[1]. This store format aims to achieve reductions in carbon emissions, water usage and landfill waste. The following table illustrates Starbucks segmentation, targeting and positioning: Type of segmentation Segmentation criteria Starbucks target customer segment Geographic Region US, Canada, Latin America, Europe, Middle East, Africa, China and Asia Pacific region Density Urban Demographic Age 18 – 60 Gender Males & Females Life-cycle stage Bachelor Stage young, single people not living at home Newly Married Couples young, no children Full Nest I youngest child under six Full Nest II youngest child six or over Full Nest III older married couples with dependent children Occupation Students, employees, professionals Behavioral Degree of loyalty ‘Hard core loyals’…
Starbucks marketing strategy is based on the following principles: 1. Focus on product and place elements of the marketing mix. Marketing mix comprises 7 elements – product, place, price, promotion, process, people and physical evidence. Businesses choose to concentrate on one or two elements as their sources of competitive advantage according to their business strategy. Accordingly, Starbucks marketing mix focuses on product element through offering foods and beverages of high quality and providing respective level of service. Place element of the marketing mix represents an additional source of Starbucks competitive advantage in a way that stores are usually located at high-traffic, high-visibility locations. 2. Customer segmentation and targeting premium customer segment. The world’s largest coffee retailer targets males and females from middle and upper class who can afford expensive prices of Starbuck products for regular consumption. The company uses mono-segment, adaptive and standby product positioning techniques in order to appeal to the needs and wants of the target customer segment. 3. Integrated application of multiple marketing communication channels. Starbucks marketing communications mix utilises a number of marketing communications channels such as print and media advertising, sales promotions, events and experiences, public relations and direct marketing in an integrated manner to communicate the marketing message to the target customer segment. 4. Consistent increase of the marketing budget to implement the above measures and initiatives. Starbucks has been consistently increasing its marketing budget for a number of years. Starbucks marketing expenses totalled USD305.1 million, USD258.8 million and USD245.7 million in fiscal 2021, 2020 and 2019, respectively. The Seattle-based coffee chain spends this budget to communicate its marketing message to the target customer segment in creative ways. 5. Extensive use of celebrity endorsements. Efficient use of celebrity endorsement is one of the cornerstones of Starbucks marketing strategy. The world’s largest coffeehouse chain…
Starbucks Ansoff Matrix is a marketing planning model that helps the multinational chain of coffeehouses to develop its product and market strategy. Ansoff Matrix focuses on four different strategy options businesses can use. These are market penetration, product development, market development and diversification. Ansoff Growth Matrix Starbucks uses all four growth strategies within the scope of Ansoff Matrix. 1. Market penetration. Market penetration refers to selling existing products to existing markets. Starbucks usually has the largest share in the majority of markets it operates. The world’s largest coffeehouse chain relies on its integrated marketing strategy to pursue market penetration strategy. Specifically, the Seattle-based coffee chain effectively positions itself as a third place away from work and home. 2. Product development. This strategy implies developing new products to sell to existing markets. The global coffeehouse chain pursues product development strategy aggressively. The company sells many variations of coffee, tea and other beverages and a variety of fresh food items, including snack under the brand names of Starbucks, Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve and Princi. 3. Market development. Market development strategy is associated with finding new markets for existing products. It is one of the main growth tools actively used by Starbucks Corporation. Started with only one coffee shop in Seattle’s 1912 Pike Place in 1971, the company has expended into 84 markets with 17133 company-operated stores and 16700 licensed stores as of October 3, 2021.[1] 4. Diversification. Diversification involves developing new products to sell to new markets and this is considered to be the riskiest strategy. The world’s largest coffeehouse chain engages in diversification sparingly. Rare occasions of diversification by Starbucks include selling CDs with own musical compilations. Starbucks Corporation Report contains the above analysis of Starbucks Ansoff Matrix. The report illustrates the application of the…