proposed change in the market strategy of Starbucks

proposed change in the market strategy of Starbucks

Introduction

Organizations in the present day rely on operational strategies to help improve their competence and performance in their respective markets. The difference in the Effectiveness of these strategies has created a significant difference between these organizations in the sense that organizations with effective operational strategies tend to perform better as compared to those with non-superior strategies. Top performing companies such as Google, Amazon, McDonalds, and Walmart are all known to be performing well in their respective industries due to the strategies that they have employed. This paper, therefore, outlines a proposed change in the market strategy of Starbucks, a popular coffee retailing company. From this change, it is expected that the company will be able to overcome competition from rival companies and therefore cement itself as a leading coffee retailing outlet.

Process of implementing the change.

Currently, Starbucks employs a widely diverse marketing strategy, which has proven to be effective in the operations of the company. However, due to the growing competition in the industry, continued use of this strategy is projected to be ineffective in meeting the organizational needs. Currently, the company has the following strategies. Starbucks has employed the market segmentation strategy as a means of establishing its operations in the market at large. This segmentation has been achieved by solely focusing on clients from the upper and middle levels of the society. Starbucks has specialized in products that are highly-priced to ensure that they only target the elite in the society who have no trouble affording the prices enforced by the company. Secondly, the company also has an ethical brand that plays a key role in marketing its services and products. The branding ranges from its eloquent stores and the services offered in the stores to the company’s distinct logo. Through this branding, the company has been able to gain global popularity, subsequently increasing its revenue at large (Sholihah, 2016). Social media advertising is also another strategy that has been widely implemented in the organization. Starbucks has realized the worth of social media in the advertisement of its operations, and this has prompted the company to use various platforms such as Twitter and Facebook for advertising its products and services. The overall consequence is that it has been able to reach a wide scope of clients and eventually increase

Although this approach employed by Starbucks has proven to be effective, it still has been found to have crucial downsides, which may significantly affect the competence of the company in the future. To begin with, Starbucks’ operational strategy can be easily copied by other companies and subsequently use the strategy to the disadvantage of Starbucks (Sholihah, 2016). Over time, this will imply that unless a change in strategy is implemented, Starbucks will be unable to maintain its competitiveness in the industry. Secondly, the global model employed by Starbucks also suffers significantly from economic environments enforced in the countries in which it is operational. Different countries have different regulations regarding foreign companies and how such companies are allowed to implement their market strategies.

The 5-P Marketing Strategy.

To enforce its position as leaders in the coffee retailing industry, Starbucks can implement the 5P marketing strategy alongside its current model to ensure that it has a reliable foothold in the industry. Each of the elements in this proposed strategy is explained as follows.

Product.

Starbucks can enhance its competence by focusing on improving the product it offers. Key attributes of the product which the company can focus on include improving the appearance of the product, improving the quality of the product as well as ensuring that the company properly packages the products it offers (Lin et al., 2013). Currently, Starbucks can be considered to have invested heavily in the products they offer. For instance, to ensure that they offer the best quality coffee, the company ensures that it partners with coffee growers in different parts of the world to collect the best coffee berries to be used in their beverage production. Similarly, the company has a well-established brand image, which implies that the company’s products can be easily recognized by the company logo. Therefore, when implementing the new marketing strategy, little or no modification will be done on the products offered.

Price.

Pricing is another important strategy that determines the success of an organization (Lin et al., 2013). In its current model, Starbucks has developed a pricing strategy that mostly targets individuals from the corporate sector. While this approach has proven to be effective in various regions such as the United States and Europe, it may not return the expected results in markets in other regions such as Africa and South America. This discrepancy can be attributed to the fact that Europe and the United States tend to have high purchasing powers as compared to target populations in Africa and South America. Therefore, Starbucks can develop client-friendly pricing strategies that put into consideration the non-corporate clients.

Place

The selected location where a company intends to set up its operation is another major aspect of this proposed strategy. Presently, Starbucks uses data science to determine the most appropriate location for launching new stores. This approach has proven to be successful, considering the fact that most locations selected using these techniques have eventually contributed to the continued increase in the total revenue gathered by the company after every fiscal year. This is, therefore, another proof of the practicability of the 5P marketing strategy into Starbucks’ operations.

People

Any company operating in the service industry relies on healthy relations between the clients and the employees of the company to realize it’s goals. Starbucks is, therefore, no exception. The people aspect of this strategy emphasizes that the staff of an organization should be of the highest competence and should also have the highest customer relations skill. Such traits will play a key role in determining the public’s perception of the company, which subsequently implies that the overall revenue of a company will be altered (Duffy, 2003). Therefore, the management at Starbucks should ensure that it has properly trained staff, capable of sustaining the healthiest relationship with their clients.

Promotion.

Finally, the company should also invest in promoting its products. With its intention of venturing into even more markets, it is necessary for the company to come up with sound promotion strategies that will market the products to potential clients in the targeted markets (Campbell and Helleloid, 2016). Some of the ways through which effective promotion can be done include using social media platforms such as Facebook and Instagram as well as relying on online advertisements which the company use to spread their services.

Conclusion.

In conclusion, Starbucks has the potential to successfully implementing the 5P strategy model. This potential can be seen from the fact that the company has already established some of these elements of the strategy and utilized them effectively. Their Effectiveness can be seen from the fact that the company’s revenue has been significantly growing over the past fiscal years.

References

Lin, T. T., Lee, C. C., & Lin, H. C. (2013). Analysis of customer profit contribution for banks with the concept of marketing mix strategy between 4Cs and 5Ps. Service Business, 7(1), 37-59.

Prasetyo, A. H., & Lo, W. (2016). Towards strategic mix 5P. International Journal of Business Management and Economic Research (IJBMER), 7(3), 654-661.

Sholihah, P. I., Ali, M., Ahmed, K., & Prabandari, S. P. (2016). The Strategy of Starbucks and it’s Effectiveness on its Operations in China, a SWOT Analysis. Asian Journal of Business and Management (ISSN: 2321–2802) Volume.

Campbell, K., & Helleloid, D. (2016). Starbucks: Social responsibility and tax avoidance. Journal of Accounting Education, 37, 38-60.

Duffy, D. L. (2003). Internal and external factors which affect customer loyalty. Journal of consumer marketing.