Under today’s ever-changing market, strategic marketing planning has become more and more significant whether of the functional or the fundamental. Especially, although financial crisis leaded economy growth slowdown, it did not cause a serious influence for chain coffee shop. As Howard Schultz said, CEO of Starbucks, “I don't think we had a business plan for the severity of what has taken place. History demonstrated to us that a downturn in the economy would not affect us, and in fact, we would be recession-proof.” (Katie Couric, 2008) Based on Financial Times, Starbucks revealed that strong earnings of $242m of 2008, a jump from the $64m it recorded during the comparable period last year and total revenues for the quarter were $2.7bn, up 4 per cent from the $2.6bn recorded during the comparable quarter at the end of 2008. It illustrated that consumers will still pay premium prices for its coffee even in uncertain economic times. (Greg Farrell 2010) In this essay, besides demonstrating the concept of strategic marketing, I will take Starbucks Corporation, United States for a case to define its position in this turbulent chain coffee shop market. Then, identify the “customized mass production” and evaluate how the organization affect and communicate the market. Next, the strategic importance of Starbucks Corporation, United States will be analyzed by various tools such as demand chain approach, SWOT and TOWS, PESTLE, pricing policies and so on with practical examples. Finally, based on these strategic analyses, the recommendations will be available for the organization to improve the competitiveness over this competitive market in the future.
Brief history of Starbucks Corporation
Starbucks Corporation, United States (NASDAQ: SBUX), the largest international coffeehouse chain company over the world, opened in 1971 by Gerald Baldwin, Gordon Bowker and Zev Siegl in Seattle, Washington, United States. In 1982, Howard Schultz, the present CEO of Starbucks, joined the company as Director of Retail Operations and Marketing. In 1987, Howard Schultz purchased Starbucks chain and rapidly started to expand. The first location outside Seattle was established at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois. In 1992, its initial public offering (IPO) on the stock market with common stock being traded on the Nasdaq National Market under the trading symbol “SBUX.” In 1996, Starbucks opened first store outside of U.S in Japan. Today, there are more than 15,000 stores in 50 countries all of the world, including with over two thirds in the home market in the United States. The products sold include coffee, beverages, merchandise, and fresh food and consumer products such as coffee beans, Starbucks cups and so on. Besides, Starbucks engages in gaining the brands add value such as business responsibly nowadays that earn the respect and trust of the partners and customers. They claimed that two areas including ethical sourcing, environmental stewardship and community involvement would be focused on. For example, the plan of Starbucks Corporation is that by 2015, all of the coffee will be grown using ethical trading and responsible growing practices. Besides, they also said that by 2015, 100% of our cups will be reusable or recyclable. So, what Starbucks Corporation emphasized is not only the tangible products, but the intangible assets such as brand image or the add value.
The development and concept of the Strategic Marketing
First of all, I want to define what is ‘market’ and ‘marketing.’ The word ‘market’ can be referred to the process of exchange controlled by supply and demand, and the price involved. The word ‘marketing’ is the relationship between supply and demand and now favors demand and consumer choice. (Chapman and Cowdell, 1998) Trace back to the origins of modern marketing, it is from the Industrial Revolutions in Britain around 1750 and in the Germany and USA around 1830. The...
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