1. Company's Background
MISSION: To inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time.
VISION: To establish itself as the premier purveyor of the finest coffee in the world while maintaining or uncompromising principles while we grow.
Starbucks was established in 1971 when it was a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle's Pike Place Market.
Starbucks has about 18000 retail stores in 60 countries today.
Starbucks started as a unique company which not only celebrate coffee and rich tradition. It brings about a feeling of connection between the company and the consumers. Starbucks believes in serving the best coffee possible. Highest quality beans are picked by Starbuck's coffee buyers who went to coffee farms in South America, Africa and Asia. Starbucks also believe in the importance of building a remarkable and enduring company that is socially responsible and profitable.
1.1.1. Company's Type of Industry and Product Mix
Starbucks is a food and beverage company that specializes in coffee and related beverages. The company sells coffee, Italian-style espresso beverages, cold blended beverages and also a selection of premium teas. It also sells coffee-related accessories and equipment.
1.1.2. Overview of Chosen Product and Current Target Market
Starbucks offers a range of products that customers enjoy in stores, at home, and on the go. We have chosen Starbucks' Iced Caffè Mocha – espresso with bittersweet mocha sauce and milk over ice. As chocolate is creamy and coffee is roasty, they are complementary to each other. They are rich and full of depth. The target market is working adults of age 25 to 40 and young adults of age 15 to 24.
2. Competitor Landscape
Coffee Bean and Tea Leaf and Costa are identified as Starbucks' competitors.
2.1. Overview of Coffee Bean and Tea Leaves
It is an American coffee chain founded in 1963. It was founded in Los Angeles and established in Singapore for more than 20 years. Currently, there are 61 outlets in Singapore. It aims to bring the world's most vibrant flavour and its employees work together to achieve “Simply the Best” in speciality coffee and tea.
2.1.1. Strengths and Weaknesses of Coffee Bean and Tea Leaf with reference to Starbucks' Product and Promotional Mix Strategies
Product Mix Strategies
1. It offers many foods ranging from pastries to main course. It also offers freshly-made food which Starbucks don't. For instance, pasta and sandwiches. 1. As compared to Starbucks, Coffee Bean has a smaller range of drinks to choose from.
2. Party packs are offered. These packs include a “java to go” coffee, mini pastries, cakes and muffins. Starbucks does not offer such packs. 2. Coffee Bean does not have as many seasonal drinks as Starbucks. For instance, Starbucks offer Halloween themed beverages during the Halloween season.
Promotional Mix Strategies
1. It uses marketing efforts such as using “#” in posts that they post to promote themselves but Starbucks doesn't.
1. It only accepts anonymous feedback through their email while Starbucks randomly choose customers through “customer voice receipts” to do a survey in exchange for a free drink on top of the normal email feedback form.
2. It has its own marketing strategy known as franchise communication. This strategy is able to attract customers. It communicates between franchisee and franchisor so that the franchisor is able to collect information and understand the problems faced by the franchisee.
2. Coffee Bean's Loyalty Program only allows you to redeem cash discounts through accumulated points. For example, for every $1 spent = 5 beans and 500 beans = $5 cash discount that can be used for your next purchase. However, Starbucks offers consumers better rewards. For example, every $1 spent = 1 star and for every 60 stars, you can redeem a free food or drink.
2.2. Overview of Costa Coffee
It is a British coffee chain that keeps true to the Italian heritage of coffee making since 1971. It operates 9 stores in Singapore and has established a Costa foundation, which aims to relieve poverty, advance education and health of coffee-growing around the world.
2.2.1. Strengths and Weaknesses of Costa Coffee with reference to Starbucks' Product and Promotional Mix Strategies
Product Mix Strategies
1. Costa has all of its products allergen guide, whereas Starbucks only has allergen guide for its food products. 1. Costa uses low volume of coffee. The coffee beans may be of high quality but the taste of the coffee is less prominent due to the volume used. Starbucks offers higher quality of coffee beans and many rare and costly coffee beans.
2. Every cup of Costa's Espresso Hot Beverages comes with a latte art. Unlike in Starbucks, it is not compulsory for them to produce a latte art to every customer's cup. 2. Costa does not offer vegan food options to their customers. Starbucks offer vegan food options such as multigrain bagel and gluten-free breakfast sandwiches.
Promotional Mix Strategies
1. Costa Coffee uses beans obtained from Rainforest Alliance Certified farms, which provides continuous support for the farmers and offers social, economic, and environmental benefits to them. It enables Costa Coffee to have an excellent reputation and brand visibility. 1. The loyalty card system for Costa is more troublesome than Starbuck's. It requires a long pin to access the website. This makes it less accessible for consumers.
2. It uses environmentally friendly cups which are made from wood pulp. While in Starbucks, their paper cups are non-recyclable.
2. It does not invest much in marketing or advertising. It focuses more on targeting regular customers. While Starbucks continuously improve to attract both regular and new customers.
3. Research Findings
From our research, we can conclude that Starbucks is well-known for its drinks as compared to other brands. Although Starbucks is well-liked for their drinks, they may lose out to other brands that sell freshly-made food. Consumers may also patronize other brands is due to price point. Other brands may be cheaper than Starbucks.
Figure 1 Why do you prefer the brand you choose above over other cafes?
Starbucks effectively communicates its current or upcoming promotions to its customers. Its 1-for-1 Promotion from 3-5pm greatly appeals to its current market target of students and young adults. This is because they have greater time flexibility to make use the promotion and it is also pocket-friendly to them.
Figure 2 Does this current promotional activity appeal to you?
For product mix, the top two suggestions for a new product are freshly blended fruit juices and more desserts.
Figure 3 What do you prefer to add on Starbucks' Food and Drinks Range?
For promotional mix, the collected data shows that majority would like Starbucks to have more student meals or lunch sets
Figure 4 Is there anything you would like to change/add in Starbucks' Promotion and Promotional Mix? If yes, what would it be?
Opportunities and Threats of Iced Caffè Mocha
They have a strong brand reputation in the market. Thus, Starbucks' Iced Caffè Mocha can be sold easily. It can be easily replaced with current cheaper iced caffè mocha in the market.
Due to Singapore's weather, consumers would crave for something cold. Iced Caffè Mocha would be one of the choice that consumers can choose. Some consumers are health cautious. They may think that chocolate is unhealthy thus they will not purchase it.
4. Proposed Product and Promotional Marketing Objectives
Product - Ice Cream
For product, we would like to propose the idea of adding ice cream to its menu.
We didn't go with the idea of adding freshly blended fruit juices or smoothies. This is because Starbucks is known for its coffee rather than fruit juices.
For example, the Iced Café Mocha inspired us to mix sweet and bitter flavours to create ice creams that have flavours unique to Starbucks.
Thus, we chose to go ahead with adding more deserts, which came in 2nd in rank. Since there are no cafes having any ice cream product category, it can be an advantage to Starbucks by expanding its brand. Starbuck's product range would be broader which in turn will attract more customers as it caters to different types of people.
Promotion - Afternoon Tea Set
Since current 1-for-1 Drinks from 3-5pm has been well received and successful. We have decided to recommend having afternoon tea sets.
More students will be interested to go to Starbucks to study. This is because they will be able to purchase a meal that is within their budget. Individuals like working adults and senior citizens can also drop by after work or during their lunch break. They will get to enjoy the promotion as long as they come during the timeframe.
This creates competition against other brands as it appears to be more affordable or a greater value for money. Therefore, there will be an increase in customer satisfaction of Starbucks which leads to greater overall Starbucks' Experience.
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