Study on Critical Success Factors Affecting Marketing Strategy in Starbucks Corporation - Essay Prowess

Study on Critical Success Factors Affecting Marketing Strategy in Starbucks Corporation

Study on Critical Success Factors Affecting Marketing Strategy in Starbucks Corporation

Abstract

Starbucks has experienced success in Singapore despite the existence of a tea-loving culture in the country. It is through effective marketing strategies that the company has succeeded in ensuring business continuity and profitability. Some marketing strategies such as introducing tea in its coffee shops demonstrate the efforts by the company to ensure it remains competitive not only in Singapore but also the rest of the world. However, the company has faced several challenges that have reduced its profitability. This dissertation looks at all the aspects of the Starbucks company marketing strategies among other critical success factors. A reference to different sources in the literature review is used to create a comparison with the primary data collected through a qualitative research. Eventually, the findings of the research are used to make recommendations for further research.

Table of Contents

INTRODUCTION 

Overview

The success of Starbucks Corporation has been influenced by factors such as the quality of its products, shop designs, customer service, social responsibility, and loyal customer reward programs. These factors have given the company an edge above its competitors. The increasing level of competition in the business sector is fuelling the level of client expectations with respect to the quality. For this reason, the quality of Starbucks products increases its chances of attracting more customers in Singapore (Simmons, 2005).

Singapore is the third global nation that is not in North America to introduce Starbucks with its recognizing clients who promptly grasp the Starbucks Experience. Starbucks Singapore is a fully-owned auxiliary of Starbucks Coffee Corporation since the year 2004. The primary Starbucks store opened in the year 1996 at Liat Towers, strategically situated along the country's famous Orchard Road shopping belt.

Starbucks cafés offer more than the finest coffee sourced from over the globe. A hospitality culture, incredible music and a perky meeting spot make the popular Starbucks Experience. The structure and environment of Starbucks stores is particularly intended to be comfortable and close, while in the meantime furnishing individuals with their very own space to use as they wish. The mix of couches, rockers, foot stools and seats, and meeting room tables implies that there is coffee for everybody. Those searching for peace and calm far from home or the workplace can unwind and wait in a cool environment, whilst those searching for a cozy spot to meet companions can cluster on a couch and visit over a mug of coffee, as they would in their own home.

As much as the company produces quality products, effective customer service also enables the company to expand its market share in Singapore.  Quality customer service is an essential strategy of creating the competitive edge thus expanding the number of local shops. Another marketing strategy by Starbucks in Singapore is through unique design of its local shops. Cafés in the Singapore are being situated as a 'third place', where people can spend the majority of their time away from work environment or home (Anon, 2008). Appropriately, significant climate is created in the shops with the interior, music and design.

Social responsibility is also a major requirement for effective marketing. The effect of corporate social responsibility on profitability has expanded altogether in the past few years. As needs be, the level of engagement in reasonable exchange, reusing strategies, carbon outflow approaches, and worker treatment can be determined as critical achievement elements for Starbucks. On the hand, customer loyalty reward programs are also useful in maintaining customers. In the catering industry, the buyer conduct is significantly affected by the level of appeal of dependability projects that offer rebates and different points of interest to faithful clients (Beuker, 2014).

Problem Statement

The cost of producing and distributing coffee keeps on rising. However, that has not halted Starbucks Corporation in Singapore from conveying fabulous financial results. The organization recently reported strong final quarter results for financial year 2014 driven by solid same-store deals development both in Singapore and the rest of the world. The operating margin keeps on extending as well, as rising item expenses are offset by leveraging of its fixed expenses. Therefore, there is need to create continuous improvement of the company's marketing strategies (Anon, 2014).

Starbucks has faced some challenges marketing its products locally in Singapore. Local marketing can improve the company's market share. Indeed, for the time being, local cafés are still rather ineffective. This is in light of the fact that, local cafés attract diverse gatherings of customers. Additionally, another point of preference that local coffee shops might maybe have over remote local establishments would be that they offer much lower costs. We may fuss about local cafés as of late expanding their costs by ten to twenty pennies yet contrasted with outside local establishments, the costs offered by nearby coffee shops stay low in any (Cateora, Gilly, and Graham, 2013).

Local Starbucks coffee shops face competition from other local establishments. This is considering that while there may be 3 Starbucks outlets along Singapore urban centre streets, there are also as many outlets from other competitors. At the end of the day, while local establishments may group in the up-market territories (e.g. Plantation) of Singapore, the heartlands remain the domain of local coffee shops. Obviously, it stays to be seen whether remote local establishments will begin to venture into the heartlands and what kind of effect this intrusion would have on nearby cafés (Cateora, Gilly, and Graham, 2013).

Statement of Purpose

Starbucks has incorporated different marketing strategies that make it a unique brand in Singapore. For this reason, it is important that we look at these strategies. For example, through the offering of coffee related items, for example, blending gear and embellishments, numerous customers can appreciate fantastic coffee at home as opposed to going out of their way. This is another illustration of how Starbucks is addressing the needs of current clients and additionally expanding its engaging quality to potential clients. Notwithstanding meeting those drink needs of buyers, in some cases there is the need to have an arrangement of little nourishments that rush to expend and simple to convey. This is here and there the situation when individuals are searching for a brisk nibble to have alongside their beverage. Starbucks has met this prerequisite through giving various chocolate varieties while likewise offering desserts, for example, after-coffee mints and candies. The advantages of this are further expanded by the way that occasionally these chocolates can supplement coffee and accordingly, when one is purchased, the other one likewise has a higher likelihood of being bought (Cateora, Gilly, and Graham, 2013).

There are likewise less critical needs that can once in a while realize potential achievement if managed effectively. These needs are frequently separated of the entire experience and incorporate things like music. Starbucks entertains its customers by another marketing strategy, Hear Music. The association here is that clients can buy music through Starbucks as an aftereffect of the concurrence with Hear Music. All through the world, numerous bistros have some kind of music playing the in the coffee shops. This is a key identity of the company that contributes to further growth of the Starbucks experience. Hear Music furnishes Starbucks with various melodies that are played during the day and this is a significant fascination for clients as demonstrated by their consistent addressing of what tune is playing. Moreover, Hear Music furnishes Starbucks with various accumulation collections and top picks so as to make clients feel more at home.

Customers, particularly the individuals who are working, prefer going straight into the store as fast as possible. This is a noteworthy goal in light of the fact that the faster the service is delivered, the more fulfilled clients will be. This is demonstrated by the take-away nature of Starbucks and its providing food offices for the common laborers.

As far as genuine coffee items, customers need having fantastic coffee varieties made up from superb coffee beans. Customers are spoken to by those organizations who manage the simmering and preparing of excellent coffees. Starbucks demonstrates this point on the grounds that it just buys and dishes top notch entire coffee beans and adjusting them into various diverse coffee varieties (Simmons, 2005).

Customers notwithstanding amazing coffee need to have the capacity to taste numerous sorts of coffee varieties. It is indispensably vital that those more prominent coffee items are accessible to shoppers while different varieties are presented on an incidental premise. Inside of in this, it is important to verify that the coffees made of astounding beans and meet the necessities of customers. These prerequisites incorporate thick cream at the highest point of coffees, solid flavor that is kept up and that the freshness of the refreshment lasts longer. Furthermore, all undesirable flavors are minimized to improve the quality of the product. Fundamentally, the less these prerequisites are met, the less engaging coffee will be to customers. Starbucks Singapore meets these prerequisites through giving numerous varieties of coffee with a specific end goal to fulfill whatever number individuals as would be prudent (Simmons, 2005).

Since Starbucks is predominantly connected with coffee, a few customers who do not drink coffee will feel less-attracted to the stores. Numerous shoppers who don't drink coffee ordinarily drink something comparative like tea. Along these lines, Starbucks has permitted tea services to be offered alternatively hence encourage all people. Essential, a few tea suppliers offer various premium teas and also natural teas, notwithstanding tea extras and blessing packs. This was a valuable procedure by Starbucks in light of the fact that it permitted them to better incorporate the prerequisites of considerably more customers and subsequently, extended the engaging quality of the store on an entire new level.

As much as coffee is the product that developed the Starbucks’ brand, tea is the popular drink in the Singapore market. Whilst at first developing its foot shaped impression in United States, Teavana looks set to become universally as well, acquainting the world with a variety of in vogue tea mixes and a zen-like affair. With Starbucks being based around beverages on the go, Teavana will offer a more casual environment, and an affair that pays respect to tea. This sounds exceptionally encouraging to the Singaporean purchaser, yet in a locale where tea is inescapable, is there quality in the marked experience coming to Asia – and specifically Singapore?

The Singapore tea business sector has seen a 3.7% development rate every year for as far back as three years and this development hints at no melting away. Whilst there are a few brands with a vicinity in Asia-Pacific like TWG, T2 and Mariage Frère with an attention on authority teas, there has been minimal indication of an expert tea brand all through Asia, and there may be a justifiable reason purpose behind this. In Asia, tea has a rich history and reason in the specialty of fermenting as well as its part in society and society. Further commercializing this ware to the standard business sector runs the danger of dismissal from energetic purchasers who are cognizant that this specific refreshment is more than a morning breakfast beverage (Anon, 2014).

Research Questions

  1. What strengths does Starbucks Corporation possess? How does this act as competitive factors for the company?

  2. What activities does Starbucks undertake to maintain and attract new customer loyalties?

  3. Who are the main rivals in the coffee industry? What is the nature of Starbucks competitive environment?

  4. What are the main marketing tools employed by Starbucks? How does this apply to the company’s diverse market?

LITERATURE REVIEW

Part 1

Hellman’s SWOT Analysis of Starbucks

The company’s shares had been slightly slow up 2014, in what is turning out to be an uneven year for the value market. However, this is due to the relative underperformance to financial investors profit taking, as opposed to any decay in the organization's essentials. Despite what might be expected, Starbucks appears to return to a development mode in the wake of battling a bit amid the 2007-2009 retreat. Furthermore, prospects stay splendid, with offer net now set to climb 19% in each of the following two years, to between $2.68 and $3.20. Should financial investors exploit the present passage point to assemble positions in this one of a kind, well-run eatery outfit? Then again is the issue still excessively costly, making it impossible to get amped up for? Hellman (2014) endeavors to address these inquiries by investigating Starbucks' business and performing a

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