Marketing Audit
Organizational Goals, Values, and Culture
Successful marketing audits contain systematic, comprehensive, and recurring features. According to Theresia and Septriadi (2018), the first element incorporated in the analysis of market audits involves the descriptions of businesses’ marketing goals and objectives. Starbucks aims to inspire and nurture the human spirit by producing one cup of coffee per person in one neighborhood (Elkins, 2020). The organization psychographic values corporate social responsibility and the sustainability of pollution-free environments. The production of sufficient cups for every customer enhances proper foundations for social and environmental sustainability. The public business partners with other agencies to meet its core organizational values.
First, Starbucks works with a culture of belonging where every buyer is welcomed to interact with the company’s products and services (Hannibal & Kauppi, 2019). Mobile apps and physical placement of orders serve every customer’s interests, depending on their location. Second, the organization values respect and dignity in business management; the firm connects with its customers through transparent, open, and horizontal communications.
The geographic demographic, ad psychographic representation of customers at Starbucks put the organization at a better position of operation. The accommodation of all ages, gender, sex, ad social classes meets the demographic needs of everyone I the society. The psychographic incorporation of instant coffee images in the cups used to serve clients increases the loyalty of customer. The geographic operation of Starbucks across the world issues each continent with a chance to taste its coffee.
4Ps Marketing Mix
Starbucks focuses on the coffee business to capture more customers. Even though the organization deals with various products and services, coffee remains the primary product traded at Starbucks. However, Bertels and Desplaces (2021) suggested that the need to expand the market reach for the organization forces top managers to modify their operations. Currently, the organization offers other food and beverages to its buyers with the objective of market expansion (Claudy, 2020). Tea baked goods, smoothies, coffee, merchandise like instant coffee, and Frappuccino includes the top categories of Starbucks’s product mix. Figure 2 provides a further description of products traded by the organization. The intensive growth strategies at Starbucks expose the company to innovative approaches to attracting and maintaining a broad customer base.
Place
Starbucks’s marketing mix determines the reachability of customers to the available products and services. The incorporation has a well-laid framework that ensures the access of merchandise, foods, and beverages to the target market. The main target of the business lies in coffee houses and cafeterias. Retailing the firm’s products occurs through retailers, websites, mobile apps, and physical cafes. Coffee can be ordered and consumed at the comfort of a customer’s wishes. The licensing, labeling and franchising of the activities in Asia, Africa, Europe, America, and other continents hold the business’s capacity to conduct transparent and accountable operations (Claudy, 2020). Figure 3 illustrates some of the famous coffees store associated to Starbucks. The strategic location of Starbucks in many continents maximizes the distribution of products in global markets.
Promotion
Promotion mixes, otherwise known as market communication mixes, describe the tactics and strategies incorporated in the running of businesses. Starbucks uses the promotion mix to improve its branding and marketing shares worldwide. Starbucks’ creativity in creating awareness and branding products increases customer loyalty and purchasing behaviors. Sales promotions, advertising, and public relations include some of the oldest marketing mixes incorporated at Starbucks. However, Foteinis (2020) hold that word-of-mouth marketing strategies outdo other forms of promotions in the organization. The use of target media remains the most convenient form of advertising incorporated by Starbucks. The target customers for tea and coffee link with the company’s information through the internet and print ads (Kim & Yun, 2019). The promotion mix is integral to Starbucks because it facilitates communication among stakeholders.
Price
The premium pricing strategy dominates Starbucks’s price mix; the business puts tags on commodities based on the quality of items ordered. Coffee brands from Starbucks sell at higher prices than in other markets; the varying costs of coffee in the industry suit customers’ interests from different social classes (Torres Castillo et al., 2020). Buyers settle for their tastes depending on their financial capabilities. The premium pricing strategy incorporates all social types in price setting; as a result, Starbucks enjoys dynamic support from a arrange of clients. In Kim and Yun’s (2019) opinion, the behavioral tendencies of consumers control Starbucks’s pricing strategy; the organization takes advantage of the perception of high prices, translating to better qualities. The pricing marketing mix in Starbucks weighs quality, high status, and production values in settling for the tag.
Company Resources and Experiences
Starbucks enjoys multiple strengths lacking in other multinational businesses of its nature. The intense marketing position experienced by the organization originates from its global brand recognition. Asniwaty et al. (2020) research findings indicated that 36.7% of the market shares of Starbucks in the U.S positions the firm in a better position than competing affiliate companies. The human resources and financial abilities at the corporation are unmatched. Starbucks operates in 34317 locations serving eighty-four countries (Tsai et al., 2020). The organization earns revenue of U.S $29.06 billion based on the quarterly report issued in 2021 (Tsai et al., 2020). Furthermore, Starbucks has an operating income of U.S $ 4.87 billion and a net income of U.S $ 4.2 billion (Asniwaty et al., 2019). The company has assets totaling the U.S $ 31.39 billion with a record range of over 383000 employees (Tsai et al., 2020). The financial strengths of the institutions put the firm in a better place to compete in the global market.
Environmental Analysis: Developing Trends and Forecasts
The operations of Starbucks Corporation lie entirely on the environmental factors affecting its operations either internally or externally. Assessing the economic, legal, technological, social, competitive, ethical, global, and demographic elements impacting the company’s functionality exposes its stakeholders to environmental issues promoting or limiting its profitability (Tsai et al., 2020). The organization should worry about tightening the environmental rules and regulations governing the coffee industry. According to Burchell (2020), the demands for the regulation of sustainability in the coffee sector threaten the survival of Starbucks. The certification initiative seeking to enhance social and environmental sustainability is rapidly growing; therefore, the firm should reconsider its labeling schemes to match the tightened rules. Presently, the firm does not comply with the private regulatory efforts of the primary third-party certification. The governing structures of Fair Trade, Shade, Organic, Rainforest Alliance, and Utz Kapeh challenge Starbucks’s marketing niche. The environmental and social standards of operations are below the expectations of the certification bodies.
The question about global warming discloses the environmental situation of the firm. Research conducted by Toress Castillo et al. (2020) illustrated the unforeseen decline in the number of coffee growers by 2050. The study’s findings showcase that the change in soil’s P.H. and textile will limit the production of the substance. Starbucks deals with the sale of coffee; however, a reduction in the number of countries growing coffee beans will reduce the number of consumers. Unless the organization incorporates the environmental and social sustainability needs, the organization’s overall performance might reduce (Toress Castillo et al., 2020). Consumption of products and services holds business in better conditions of operations; a reduction in the number of loyal clients predicts the closure or poor performance of a particular organization. The need to conserve sustainable business will affect Starbucks; as a result, the management should reconsider better sustainability practices to remain relevant in the competitive beverage industry.
The environmental disasters experienced in coffee-growing countries raise the alarm for the fall of Starbucks in the beverage industry. According to Foteinis (2020), coffee growing impacts changes in the rainforest ecosystems, meaning the plants and animals in such countries have a limited lifespan. Secondly, coffee-growing countries encounter soil erosion challenges from deforestation (Foteinis, 2020). Coffee beans production occurs excellent under cleared forests and shades; however, the long-term impacts of bush clearing affect the environment negatively. The ban on the traditional growing of coffee beans in the shadows can limit the profits earned by Starbucks. The reduced supply of the raw material to factories and later to Starbucks foresees the company’s poor performance.
A Brief Overview of the Coffee Shop Industry
Starbucks operates in the coffee shop industry, offering several products for its customers. The economic summary of the firm includes Starbucks’s target markets, services, and products. The organization boasts coffee makers, coffee cup sizes, barrel-aged coffee, coffee capsules, and low calory products (Shirdastian et al., 2019). Moreover, the company produces energy drinks, fruit juices, Ethos water, and alcoholic drinks. Shirdastian et al. (2019) categorize Starbucks’s operations under hospitality management based on the numerous services it offers in the form of drinks. Customers enjoy free electricity and Wi-Fi, a condition that attracts youth to the business entity. As a multinational organization, Starbucks has international expansions in terms of locations in which it works. Europe, Africa, and Asia are the primary beneficiaries, with other parts of America and Oceania benefitting from the industry’s foundation.
Current Climate and Situation at Starbucks
The trending business strategies at Starbucks depends on the competitive advantages. Bianco (2020) highlights that Starbucks is battling tight social and environmental policies; the organization does not enjoy a monopoly based on the climatic conditions instituted by business regulators. First, the concern of waste management puts the firm in a difficult position to conserve the environment. Bianco (2020) proposed recycling to manage plastic waste in Starbucks. However, the company faces workforce and technical challenges in implementing the policy. For a start, Asniwaty et al. (2019) recommended the 10 % use of recycled paper in Starbucks’s beverage cups. The firm implemented the initiative in 2006; the organization paved the way for creativity in conserving sustainable environments through recycling.
The second trending environmental situation at Starbucks involves the ban on plastic straws. Kevin Johnson, the C.E.O. and President of the company, assured the world about the corporation’s insight of ending the use of plastic straws. The action against the initiative began in January 2020 (Roy et al., 2021); climate change concerns forced the organization to settle for other options of sucking cold drinks from their restaurants. Using biodegradable materials in straw making would replace the plastics that caused environmental pollution and interference with sea animals. Roy et al. (2021) stressed that the organization also proposed the invention of straw-less lids for some cold drinks to eradicate the use of plastics. The objective of Starbucks to reduce waste management in 2030 by 50% constituted the management’s decision to create new ideas.
Corporate Social Responsibility (C.S.R.) is also a trending issue in the competitive beverage industry. Starbucks has plans to partner with private and governmental agencies to ensure social accountability for the business, public, and other stakeholders. The journey to creating a corporate and accountable organization began in 1994 when the organization partnered with Conservation International (Kim & Yun, 2019). Starbucks’s attempt to promote C.S.R. foresaw the creation of C.A.F.E, an option that left customers with the choice of ordering coffee in the café rather than through mobile apps (Oh et al., 2019). The equity practices observed at Starbucks allow clients to rank the firm’s operators. An audit is done for farmers using a rating system equipped with two hundred and forty-nine indicators. Starbucks’s stakeholders and shareholders review the overall score ratings in determining environmental, leadership, economic, and accountability elements.
Environmental and Economic Factors Affecting Starbucks
Starbucks’s economic and environmental stability lean on the strong policies of operations by management. Like any other business, Starbucks has experienced several setbacks in the competitive market. First, the changing demographics impacted the performance of Starbucks. The snack store and retail coffee industry witnessed a significant slowdown in sales in 2009 (Shirdastian et al., 2019). The U.S national government announced a reduction of 6.6% of the revenue earned from the company in 2009 (Kim& Yum, 2019). The changing demographics in the age, sex, gender, and social statuses of individuals depending on the products shifted the firm’s profitability. For instance, the performance pressure issued by the government put Starbucks on a continuous performance track. Although the pressure was high on the business, the government commended the C.E.O. for its excellent performance over the past decades. Still, it encouraged the organization to mount more robust pillars for a better future.
Competitive pressure from Dunkin keeps Starbucks’s competent and relevant in the coffee store and retail industry. The operations of Starbucks fall under the mature stage medium level concentration, similar to Dunkin; any minor negligence by the company issues Dunkin with competitive advantages. The firm’s life cycles are higher than its competitors; Starbucks’ retail and coffee store industry compiles more than 38% of the total market shares (Bianco 2020). Only two firms control the market; Dunkin is the closest competitor in terms of market shares; combined, the two stores dominate over 60% of current market shares. The market power enjoyed by Starbucks started with a slower growth rate of 0.9% between 2008 and 2013 (Bartels & Desplaces, 2021). The latest annual general meeting indicates an increase in the firm’s growth rate to 3.9% (Bartels & Desplaces, 2021), meaning the environmental factors affecting the business generate positive energy. The economic demand to associate with premium coffee acts as the profitability driver at Starbucks.
Environmental elements determine the growth rates of businesses run at international levels. Investigating Porter’s five force analysis scheme exposes the external environmental forces impacting the functioning of Starbucks. First, the threat to new entrants in the beverage and retail industry moderately affects the organization’s productivity. The monopolistic competition structure in the beverage industry makes Starbucks reluctant to innovate. The company has no tight competition; the work conditions favor owners and oppress workers. The availability of high-threat substitutes for coffee keeps Starbucks moving; the organization invests in other juices and soft drinks to complement the coffee business.
In addition, the changing social, personal, psychological, and cultural consumer behaviors affect the functioning of Starbucks. The four-factor consumer behaviors determine the target market and buying patterns for a particular product. American cultures play a crucial role in the popularity of Starbucks; the firm rewards society through the profits earned from sales of products (Torres Castillo et al., 2020). The reward program advertises and promotes the community’s loyalty to coffee, energy drinks, water, and juice products (Shirdastian et al., 2019). Customers’ changing tastes originate from the personal factors in consumer behavior; the aging patterns, events, and social class ranking interfere with customer influences in purchasing Starbucks products and services. The beliefs, attitudes, and perceptions about the firm’s products motivate or distance consumers from buying materials. Psychological factors play a significant role in determining consumer behaviors at Starbucks.
Alternative Strategies
The strategic changes in the 4Ps mix strategies expose Starbucks to several challenges. First, the introduction of expansive markets for new products risks reducing the quality of the coffee sold at the firm. Starbucks’s survival in the retail and coffee store business developed from the high-quality coffee beans used in beverage production. Although venturing into other markets adds more value to the organization, Starbucks risks losing its customer due to the diversity of other corporates in the market. Investing the additional U.S $ 4 million in coffee production can attract more profits rather than venturing into different small needs.
The organization can shift advertisements from print media to online platforms. An investment of over the U.S $ 4.5 million can facilitate creative arts in the branding and labeling its products. Advertising through word-of-mouth is so traditional and might lack an audience with the digital era in generation Z. Online adverts are cheaper and easily accessible with the increased installation of the internet across the world.
Place mix strategy can be more appealing; each continent should concentrate on a single product to increase the market reach. The mixed operations of food, beverages, energy drinks, and water stagnate the growth of the business in growing countries. Investing the U.S $ 30 million in Africa can help the firm’s sales rise because the continent will concentrate on producing one production line. Monopoly frameworks of business in the corporation can increase with such funding.
Recommended Marketing Strategies
The recommendation of the product marketing strategy can work best because it aims to grow the organization’s sales. Unlike the other three 4Ps, investing more funds in production shapes businesses’ portfolios. The timing in the changes of the marketing strategy should incorporate long-term benefits. 2 years is efficient for the adoption, testing, and implementation of the product marketing strategy. Figure 1 illustrates some of the fundamental elements that affects the implementation of the product marketing strategy. Procurement, human resource management, firm infrastructure and, technology will affect the product strategy.
The competitive checkpoints and reactions of McDonald’s regarding CRS can motivate the managers to adopt sustainability policies in the production line. A company cannot operate in a region with the physical presence of the product. Neither advertising nor place mix can operate in the absence of a product. According to Claudy (2022), a company’s reputation starts with the proper management of production lines based on the attached audience marketing benefits linked to the policy and strategy of marketing. Focusing on the product matrix enhances organizations to learn the buying patterns, marketplace weaknesses, and strengths (Bertels & Desplaces, 2021). Knowing what works in the market develops better strategies for product mis. Starbucks should consider the approach of product mix to boost its profits and expansion in other markets.
References
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Burchell, J. (2020). The corporate social responsibility reader. Routledge.
Claudy, M. C. (2020). Sustainable new product development strategies. Companion to Strategic Marketing (pp. 245–260). Routledge.
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