MARKETING MIX STRATEGY

Starbucks Corporations - Marketing Mix Strategy

Starbucks Corporations - Marketing Mix Strategy

Introduction

Coffee is one of the fastest growing food service markets globally, with a net income of approximately $9.6 billion in 2004 in the U.S. alone, due to the explosion of cafes and gourmet retailers in the 1990s (The Gale Group). The industry trade group Specialty Coffee Association of America (SCAA), in its Retail in the USA 2005 report, stated that at the end of 2005, coffee sales had reached $11.05 billion. In 2005, Americans drank more than 300 million cups of coffee, with 75% of those being home brewed. 15% of all Americans drank a cup or more of specialty coffee daily, an increase of 6% from 2000 (Kim, 2008, pp. 41-49). Starbucks is the world's number one specialty coffee retailer, currently with more 12,000 coffee shops in more than 35 countries. The outlets offer hot and cold coffee drinks and few-food items, as well as beans, some coffee accessories, and teas. The company owns about 7,100 of its shops, which located in about 10 countries—though mostly in the U.S.—while licenses and franchises operate more than 5,300 units worldwide. In addition, Starbucks markets it coffee through grocery stores and licenses its brand for other food and beverage products (Purcell, 2011, pp. 110-121).

Strategic History

Purchasing Strategy

The company reinforced its purchasing strategy through aiding in the sustenance of coffee growers through direct payment of farmers. This ensured that the company considered the environment and society of its coffee producing regions. The strategy also saw to the purchase of 40 percent of its coffee through contracts drawn to last for three to five year periods. In addition the company adopted a new criterion for vetting its suppliers on the basis of social, economic and environmental factors. This was created with aid from the international's center for environmental leadership in business that recognized the company for its supply strategy. In doo4, the company established a center for supporting growers in Costa Rica as well as their communities. The company also participated in the marketing of the Fair Trade Certified Coffee, and its various stores to perpetuate the interests of growers and benefit from 10 million pounds of fair-trade coffee in 2005 (Kim, 2008, pp. 41-49).

Expansion Strategy

The company also developed a strategy for expansion that saw it target various geographical regions that were suitable to their goals and infrastructure. The strategy involved choosing a city that served as the hub for each target region with the aim of establishing a minimum of 20 stores in the entire region in a period of two years. Furthermore, vice presidents were selected to oversee the development of stores and instill the organizational culture. The presidents also facilitated the recruitment of operation and marketing staff equipped for chain store management. The expansion strategy in metropolitan regions entailed an approach aimed at setting up stores in the entire area. Through this, company was able to reduce costs of management, expand the customer base and facilitate faster service for ...