Running head: MARKETING PLAN 1

H. Wayne Huizenga College of Business & Entrepreneurship

NOVA SOUTHEASTERN UNIVERSITY

Course: Marketing Decisions for Managers

Marketing Plan for Starbucks

MARKETING PLAN 2

Tables of Contents

1.0 Executive Summary……………………………………………………………………………. Page 6

2.0 Situation Analysis…………………………………………………………………………...…. Page 7

Industry Classification

Capabilities

Industry Analysis (Competition Assessment)

2.0 Situation Analysis (Cont.) ……………………………………………………………….…… Page 8

Rivalry Among Existing Firms

The Bargaining Power of Buyers

Threat of Substitute

Bargaining Power of Supplier

2.1 Market Summary……………………………………………………………….……………...Page 10

Size

Growth/Trend

2.2 SWOT Analysis…………………………………………………...……………………….…. Page 11

Strength (Internal)

Weakness (Internal)

2.2 SWOT Analysis (Cont.) ……………………………………....…………………………….... Page 13

Opportunities (External)

Threats (External)

2.3 Competition………………………………………….………………………………….……. Page 14

VRIO

Dunkin Donuts

2.3 Competition (Cont.,) …………………………………………………………………………. Page 16

McDonalds

2.4 Product Offering……………………………………………………………………….………Page 17

2.5 Distribution………………………………………………………………………………...…. Page 19

3.0 Marketing Strategy……………………………………………………….…………………….Page 20

3.1 Objectives………………………………………………………………………………………Page 21

3.2 Target Marketing……………………………………………………………………………….Page 22

3.3 Positioning……………………………………………………………………………………..Page 23

MARKETING PLAN 3

3.4 Strategies…………………………………………………………………………………. …...Page 24

Product

Pricing

Distribution……………………………………………………………………………………………….Page 25

Marketing Communication…………………………………………………………………….…….....Page 25

3.5 Marketing Mix………………………………………………………………………………....Page 26

3.6 Marketing Research…………………………………………………………………………....Page 27

4.0 Financials………………………………………………………………………………………Page 28

Forecast

Operations

5.0 Control…………………………………………………………………………………………Page 23

5.1Implementation…………………………………………………………….…………………....Page 31

5.2 Marketing Organization……………………………………………………………….………. Page 31

References………………………………………………………………………………………...Page 32

List of Figures and Tables

Figure 1, Starbucks Growth Chart………………………………………………………………...Page 9

Table 1.1 Market Segment Analysis………………………………………………………………Page 10

Table 2.1 Starbucks VRIO Framework……………………………………………………...……Page 14

Table 2.2 Dunkin’ Donuts VRIO…………………………………………………………………Page 15

Table 2.3 McDonald VRIO……………………………………………………………………….Page 17

Table 3.1 Product Offerings……………………………………………………………………....Page 18

Table 4.1 Menu and Price Offering…………………………………………………………….....Page 19

Figure 2 Starbucks Distribution Layout…………………………………………………………..Page 21

Figure 3 Revenue Projection……………………………………………………………………...Page 27

Table 5.1 Marketing Budget…………………………………………………………………...….Page 29

Table 5.2 Operations……………………………………………………………...……………….Page 29

MARKETING PLAN 4

Marketing Plan for Starbucks

1.0 Executive Summary

Starbucks is preparing to launch a healthy and hearty meal selection to its menu. The meal

selection will target health conscious individual and differentiate the company from its major

competitors. The first menu will include three meals, garlic shrimp, southwest salad, and lemon

chicken, all of the ingredient will be organic. Starbucks can use social media to reach segmented

consumers, in addition, Starbucks can start recycling its coffee beans to take advantage of the

growing trend of environmental conscious millennials. Starbucks will remain to focus its strategy

to target students, white collar professionals such as doctors, nurses, lawyers, corporate

executives within the average age of 42. Marketing should also be focused or geared toward the

latest diet trends, whole wheat, flour-free and sugar-free foods. Even though Starbucks will

spend more money on acquiring organic products, its return on investment will immediately

show by gaining new and loyal customer base. Marketing budget will be increased from 13% to

15% in order to create demand. Our primary financial objective is to increase earnings by

19.86% and increase market shares by 2%. This increase in earning will offset the costs

associated with purchasing organic products.

MARKETING PLAN 5

2.0 Situation Analysis

Industry Classification

Starbucks is in the restaurant industry with the focus of specialty Eateries. According to an

article by National Restaurant Association, the restaurant was accounted for $683.4 billion in

sales, and 13.5 billion employees in 2014. Although Starbucks is in the restaurant industry, their

main focus is specialty eatery products such gourmet coffee, espresso drinks, and other

beverages, account for about 40 percent of specialty eatery revenue.

Capabilities

Starbucks uses the generic strategy of differentiation by providing its customers with products

and services that are perceived as valuable and different. In 2013 Starbucks raised their beverage

price by an average of 1 %. While some may not notice the price increase, Starbucks third-

quarter net income rose 25% from $333.1 million to $417.8 million. Hence, the cost for green

coffee is decreasing. By raising their price of coffee by an average of 1%, Starbucks was able to

increase their profit by 11%. Starbucks exercises competitive intelligence by not competing with

Dunkin Donuts’ low price; Starbucks separates itself from Dunkin Donuts by reinforcing their

top quality image of the brand and product. Starbucks maintains a loyal customer base with

higher-income individuals in which perceive their coffee beverages as an affordable luxury.

Industry Analysis (Competition Assessment)

Threat of New Entrant

MARKETING PLAN 6

Since the entry barriers are not excessive, the restaurant industry is moderately open for potential

new entrants. The amount of capital requirement is very low for this industry. However, this

does not have a significant effect on Starbuck, due to its robust established brand and consumer

loyalty.

Rivalry among Existing Firms

Starbucks faces many competitions from major rivals. Although Starbucks holds a dominant

position in its industry, there are many competitions from rivals such as Dunkin' Donuts Brands

and McDonald’s. Although Dunkin’ Donuts and McDonald’s price are low, Starbucks holds the

competitive advantage base on its brand identity, specifically in the coffee market.

The Bargaining Power of Buyers

Starbucks' customers have a relatively low bargaining power. Most of its purchases are coffee

and snack items that does not carry enough weight to heavily influence buyers in the industry.

Due to low switching cost, Starbucks faces a very high bargaining power of buyers.

Threat of Substitute

There are a vast amount of alternative food and beverages consumers can switch too.

Alternatives are restaurants and juice bars such as Italian restaurants offering authentic

cappuccino and juice bars serving vegan and cold pressed juices. Threat of Substitute is very

high due to competition within the green juice industry and the wide variety of authentic

restaurant chains.

Bargaining Power of Supplier

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Power of suppliers is weak due to Starbucks ability to choose from a wide variety of potential

suppliers. Since Starbucks is a major customer for most of its suppliers, their bargaining power

drastically decreases.

2.1 Market Summary

Size

Starbucks Corporation is one of the most known coffee shops worldwide, expanding their

innovation with technology have allowed them to keep up with the latest trend. Starbucks total

store count is 19,767 ranging from the United States to Poland. Starbucks headquarters is

located in Seattle, Washington. Starbucks operates in various locations such as roasting and

distribution in Amsterdam, Netherlands and manufacturing in Rancho Cucamonga.

Growth/ Trend

At the end of the 2014 fiscal year, Starbucks added 1,599 stores worldwide to increase its

international footprint. This effort boosted revenue by 11% (More than $16.4 billion). During

that year, its adjusted earnings per share (EPS) grew 21%. Starbucks growth has been beyond

coffee, in 2012 Starbucks purchased Bay Area Bakery La Boulange in order to expand their

menu. In addition to food items, Starbucks is also starting to expand its early evening customer

base by offering wine, beer, and small-plate appetizers after 4 p.m. in selected location.

Refer to figure 1 to view Starbucks growth chart

MARKETING PLAN 8

Figure 1: Starbucks Growth Chart

Staying aligned with the current market trends will increase Starbucks growth possibilities. Some

market trends include:

1. Nitro Coffee: the result of cold brew coffee infused with nitrogen gas. This enhances the

taste of coffee and give it a creamy look.

2. Specialty coffee: there is a huge demand for high-quality and expresso- based beverages.

This demand is projected to increase in 2016.

3. Combination Beverages: A combination of coffee and tea is maturing in the Asian countries.

This combination is projected to grow in popularity.

Refer to table 1.1 for market segments, customer needs and possible strategy

MARKETING PLAN 9

Table: 1.1 Market segment analysis

Market Segment Type Customer Needs

Behavior View a comfortable and familiar

experience regularly

More Couch setting location and continue

to greet customers as they come in.

Demographic Age 16-30 white collar and student More locations with drive-thru for On the

go coffee and snack

Psychographic Mid-higher income, young

optimisms mindset

Individuals that focus on staying trendy

and is not heavily influence by price, offer

differentiated items regularly

Geographic High density and high foot traffic

area

Universities, and heavily populated

shopping plaza

2.2 SWOT Analysis

Strength (Internal)

1. Customer Service: Starbucks is globally known as one of the world’s largest coffee

chains. The company’s name and logo, in addition to their “Starbucks on every corner”

their strategy have enabled them to take over local markets. Starbucks is well known for

their loyalty to their customers, reputation for selling fine products, and excellent

customer service with a strong mission and ethical values. Starbucks is committed to a

role of environmental leadership in all facets of their business. Starbucks created a

website called “MyStarbucksIdea.com,” which allows the company to obtain their

customer’s opinions on any ideas or strategies to improve the company overall.

2. Differentiation from other coffee shop: Starbucks offers beer and wine within a few

coffee shops in major cities. This effort is a great opportunity to increase consumer

MARKETING PLAN 10

diversity and increase profit production for years to come as most coffee shops do not

offer these beverage options.

3. Technology/ Social Media: Many of the young generations are looking for a warm and

inviting place to relax and connect with others. Starbucks caters to that segment by

creating a social hub for younger generations, such as college kids or the after-hours

social drinkers.

Weaknesses (Internal)

1. Price: the price of a 20-ounce cup of Starbucks coffee is approximately $2.25 and a 20-

ounce cup of coffee from Dunkin Donuts is $1.95. While Starbucks is known for their

quality, they are also known for their high priced coffee. Their high prices have created a

competitive disadvantage with small coffee shops. McDonalds holds a price advantage

over Starbucks by offering a premium any size cup of coffee for $1.00. Coffee prices are

increasing exponentially. If prices continue to increase, Starbucks will have no other

choice but to increase their prices.

2. Food selection: Starbucks offers a small selection of snacks in addition to its beverages.

However, competitors like Dunkin Donuts and McDonalds have a wider selection of food

on their menu which includes breakfast, lunch, and dinner. This gives consumers the

choice of having coffee with a full meal, instead of only a snack. With competitors like

McDonalds and Dunkin Donut offering larger selections of food, Starbucks is faced with

a competitive disadvantage of having a limited food selection to go along with coffee.

3. Promotions / Discount: While competitor Dunkin Donuts offers military and police

discounts, Starbucks is losing traffic from consumers that serve in the government

branch. With a “10 percent all year round discount and a 20 percent discount for veteran

MARKETING PLAN 11

appreciation in the month of May”, Dunkin Donuts can gain a customer base with

individuals that support the US military and law enforcement officers (Veterans

Advantage, 2010).

4. Bundle offer: Starbucks main competitor, Dunkin Donuts, offers bundle deals for its coffee

and along with snacks. A “Box o’ Joe” contains ten 10 ounce servings, equivalent to ten

small cups of Starbucks coffee, making it less expensive for a crowd to bundle and share

coffee. This equates to a competitive strength for Dunkin Donuts, while illustrating a

weakness for Starbucks. Starbucks’s lack of bundle deals could inhibit group gatherings

due to their lack of bundle deals and high costs.

Opportunities (External)

1. Increase demand: The demand for coffee in China and India drastically increased in the

past couple years. China and India will give Starbucks one of the greatest opportunities

for growth. China and India are the two most heavily populated countries in the world, with

a combined estimated population of over 2.5 billion. Starbucks has an opportunity to

expand its stores in China and penetrate the market in India. India’s Gross Domestic

Product (GDP) and Gross National Income (GNI) is expected to grow within the next two

years.

2. Carbon footprint: More people are becoming environmentally conscious; hence Starbucks

has the opportunity to “go green.” By recycling coffee grounds, Starbucks can reduce it

carbon footprint and increase its image by exercising good corporate citizen.

Threats (External)

MARKETING PLAN 12

1. Trade barriers: Governments influence the trade on coffee beans by setting tariffs and

quotas. These trade barriers increase the price of imported coffee beans thus, restricting

the amount being imported. In addition to taxes, Starbucks may be subjected to pay both

domestic and international taxes.

2. Crowded market: Due to the increasing demand of coffee and the high entry rate, the

market is increasingly becoming saturated. New entrants are focusing their attention to the

fast pace millennials who are constantly on the go. This threat can lower Starbucks’ market

share in the industry.

3. Price increase: After two-and-a-half years of declines, green coffee prices increased by

1.6% in April 2015. Brazil is the largest producer and exporter of coffee beans,

accounting for 33% of total production. Brazil is currently experiencing their most

catastrophic droughts in 80 years. This may cause a dramatic increase in coffee bean

prices. Starbucks will have to raise its prices in order to cover the cost of coffee.

2.3 Competition

VRIO

Starbucks

Starbucks currently holds a competitive advantage, while consistently exemplifies an above

average firm performance. Starbucks serves coffee and other products that are of value to high-

income and loyal customers. The brand image of Starbucks is very rare; there are only a couple

firms in the United States that holds a stronger brand image than Starbucks. The brand image of

Starbucks is unique resulting in the high cost rate to imitate. Starbucks uses its resources and

capabilities by offering new product mixes to target new segment groups.

MARKETING PLAN 13

Refer to table 2.1 for VRIO breakdown

Table: 2.1 Starbuck VRIO Framework

Dunkin’ Donut

Dunkin' Donuts’ price strategy is centered on the middle income population. Dunkin’ Donuts

prices are made to be appealing in order to attract a large market share. They focus on selling

regular coffee and breakfast foods that are affordable. Dunkin’ Donut has a rare niche in the

market by appealing to lower income demographic communities. Dunkin’s strategy is easy to

imitate because any new entrants can start selling its coffee at a low cost. By offering drive-thru

services in nearly all of their locations, Dunkin’ Donut is exploiting its capability to gain a

reasonable share of the market that prefers convenience.

Refer to table 2.2 for VRIO breakdown

MARKETING PLAN 14

Table 2.2: Dunkin’ Donut VRIO

McDonald

Despite Starbucks being a leading coffee provider around the world, they face increasingly tough

competition from large fast food chains. McDonalds entered the coffee beverage market with its

McCafe brand, which offers similar products as Starbucks but at a lower cost to consumers.

McDonald’s brand image holds a high value. McDonald’s is difficult and costly to imitate in

regards to its product, its recognizable brand, its large size and wide scope of resources.

McDonalds has the ability to compete for a greater market share in the industry. In addition,

McDonalds offers strong support to its franchise operations.

Refer to table 2.3 for VRIO breakdown

MARKETING PLAN 15

Table: 2.3 McDonald VRIO

Recourse of

Capability

Valuable Rare Inimitable Organization

Exploit

Competitive Implications

Brand image

Yes

Yes

No

Yes Sustained competitive

advantage

Service

No

No

No

Yes

Temporary Advantage

Affordability

Yes

No

No

Yes

Competitive parity

Although Starbucks has two strong competitors in the industry that focuses to low cost,

Starbucks should avoid going into price wars with these competitors. Starbucks holds the

competitive advantage by having a strong brand image and an impeccable customer service

reputation. In order to sustain their brand recognition and reputation, Starbucks must continue to

differentiate themselves from the competitors.

2.4 Product offering

Starbucks newest offering is the “Fuel Your Day” package which allows consumers to choose

from an array of healthy snacks and a bottle of water.

Refer to table 3.1 for limited offering

MARKETING PLAN 16

Table: 3.1 product offering

Selected Items Choose from

1 of 24 lunch items sandwich, panini, salad bowl, wrap, or bistro

box

1 of 16 snack items ($1.75 or less)

1 sweet item fresh banana, That's It® Fruit Bar or a

Frappuccino® cookie straw

1 bottled water Ethos® or Hawaiian Springs® where available

Starbuck has four main categories of product line, coffee, tumbler, food, and equipment.

Starbucks product mix consists of various beverages, snacks, and lunches. Its product is the only

thing that brings in revenue, however Starbucks takes pride in its customer service. Starbucks’

main product line and product mix are as follows:

Product Line 1: Coffee Product mix: Ice coffee, Latte, Frappuccino, and Expresso

Product Line 2: Tumbler Product mix: Starbucks Tumbler, Straight Tumbler, Design your own

tumbler, Curve Tumbler

Product Line 3: Food Product mix: Muffin, Croissant, Salad, and Sandwich

Product Line 4: Equipment Product mix: Coffee Press, Coffee Grinder, Espresso Machine,

Coffee Machine

Refer to table 4.1 for menu and pricing

MARKETING PLAN 17

Table 4.1: Menu and price offering

Starbucks plans to offer a short menu that targets health and environmentally conscious

individuals that’re in need of a hearty meal on the go. This new menu will feature half of

Starbucks healthy choice items. Everything on the menu will be organic and all packaging will

be biodegradable.

Major items will include:

1. Garlic shrimp with whole wheat pasta and whole wheat bread, this item will be served with

broccoli and potatoes.

MARKETING PLAN 18

2. Lemon Chicken with Indian curried garbanzo beans with lemon, this will be served with

sundried tomatoes.

3. Southwestern fiesta salad with black beans and avocado, this meal will have the option of

adding cranberries and pecans.

2.5 Distribution

One cup of Starbucks coffee can possibly depend on 19 different countries (coffee beans, milk,

sugar, paper cup, etc). Starbucks global hub connects some of the poorest countries with some of

the wealthiest countries.

Supply chain: Massive amount of coffee beans are picked from three main regions (Latin

America, Africa, and Asia-Pacific) and shipped to several of distribution centers. This is then

shipped to one of 48 regional distributions, after the regional distribution, the coffee beans are

sent to a green coffee warehouse. This is where the beans are prepared, manufactured, and packaged.

Once the beans are prepared, they are delivered to Starbucks locations.

Trend Since the trend of getting on the go coffee is growing, Starbucks also use distribution channels

such as retail and grocery stores to sell its package and canned products. This development gives

consumers a chance to brew their own Starbucks coffee and buy canned coffee while grocery shopping.

Refer to figure 2.1 to view supply chain layout

MARKETING PLAN 19

Figure 2: Starbucks distribution layout

3.0 Marketing Strategy

3.1 Objectives: To enhance Starbucks quality of food and beverages which align with the current

healthy and hearty related trends.

Annual transitioning to implement health conscious products and services offered at Starbucks

will begin in 2014. Enhancing quality health conscious products to consumers will continue to

improve with longevity of Starbucks branding.

2014: Starbucks will partner with Dannon in offering a healthy Ready to Eat, Greek Yogurt

Parfait. This Evolution Fresh product will be the initial implementation of Starbucks healthy

product trend.

2015: With increasing net revenue from Evolution Fresh sales, Starbucks will provide cold-pressed

green juices in order to serve the high percentage of green juice consumers.

2016: Starbucks will focus on summer initiatives by offering a Power lunch consisting of nutritious

foods and beverages specific for lunch.

MARKETING PLAN 20

2017: Starbucks will focus their transition to a more health conscious movement by

implementing their merger company Teavana. The new Teavana RTD non-alcohol premium tea

will be the foremost factor in targeting the loose leaf tea consumers.

3.2 Target Marketing

Starbucks strategy is focused on keeping up with the latest health and diet trends while

progressively enhancing the quality of their beverages. Their overall consumer target includes a

wide range of men and women from adolescent to adulthood. However, their primary consumer

target is white collar professionals such as doctors, nurses, lawyers, corporate executives within

the average age of 42 and an annual income of $90,000. While, their core customers are

categorized as Young Urban Adults which portray a vast amount of tastes and interests along

with a diverse income. These consumers are more likely to indulge in high priced items to make

a statement, keep up with the latest diet trends such as Starbucks multiple non-dairy options i.e.

soy and coconut milk. They are also likely to coordinate business meetings with their clientele at

the nearest Starbucks taking advantage of their WiFi capabilities.

Their secondary consumers target are blue collar workers such as first responders specifically

law enforcement, firefighters, and paramedics. The work environment and time interval can be

dynamic, varying and tiresome. Starbucks offers a variety of high-quality beverages including

cold brew coffee. Cold brew is essentially brewed for a longer period of time for the increased

stimulus potential, in which these blue collar workers can maintain initiative within their

workplace. The most valuable and steady consumers for Starbucks are students, varying from

grade school to graduate and doctoral programs. Providing WiFi access, food, snacks and a

variety of beverages are specifically targeted to students who spend excessive amounts of time in

the comfortable and steadfast atmosphere of Starbucks. Although teenagers may not have the

MARKETING PLAN 21

financial capacity to indulge in Starbucks luxuries, middle ages to senior citizens and tourists

compensate for any decrease in revenue during the summer when students are in the non-

classroom setting.

3.3 Positioning

While scientific studies are enhancing the public’s knowledge on the quality of products that we

consume, prices seem to be the foremost attribute to the quality of service. Starbucks will focus

on providing fresh, high-quality ingredients within their foods that meet the health and hearty

conscious community. By providing dairy free alternatives such as soy milk, coconut milk and

fat-free skim milk in beverages will position Starbucks as a cruelty-free, body image positive

corporation.

Starbucks has reached the ultimate level of their points of different (POD) by implementing

innovative technology, exceptional food products and beverages and corporate social

responsibility.

The POD of innovate technology that Starbucks practices is a Reward Card that stores

consumers’ monetary funds, discount offers, past purchases and even an individualized menu for

rapid and easy ordering. Many consumers engage in Starbucks Reward Card which enhances the

company’s points of difference against similar competitors. With over 23,000 stores in over 70

countries, Starbucks has made a global difference around the world on how consumers consume

coffee. Starbucks POD also includes corporate social responsibility, by providing poverty-

stricken individuals and families with goods that have not been sold. Starbucks corporate social

responsibility can be found within their motto:

MARKETING PLAN 22

It is our vision that together we will elevate our partners, customers,

suppliers and neighbors to create positive change.

To be innovators, leaders and contributors to an inclusive society and a

healthy environment so that Starbucks and everyone we touch can endure

and thrive.

Consequently, another POD for Starbucks are their committing to their powerful business

practices. By the continuation of offering ethically sourced coffee beans, has established their

branding in the coffee industry.

Starbucks points of parity or POP are limited compared to other competitive companies. A POP

that greatly translates to a decrease in Starbucks net revenue are their coffee machines. Starbucks

coffee machines are limited to a single beverage machine, whereas a competitive company such

as Nespresso are multi-beverage machines which are more attractive to the consumer.

3.4 Strategies

Product

Two main entities of Starbucks are high-quality food and various caffeinated beverages. In order

to deliver exceptional quality of consumable products, Starbucks maintain a strict quality control

policy pertaining to their perishable items. Keeping up with the latest diet trends, whole wheat,

flour-free and sugar-free foods are being implemented to create a healthy and hearty lifestyle

initiative. While Starbucks total quality management is consciously fine tuning nourishment health

standards, their reputation for quality coffee beans remains intact. Starbucks have maintained their

reputable standard for superior coffee beans by importing from Kenya, Sumatra, Ethiopia and

Costa Rica. The introduction of dairy free creamer alternatives has enhanced Starbucks status as

MARKETING PLAN 23

the leading healthy and hearty conscious coffee provider. By developing these health cognizant

alternatives raised the standards for similar coffee related companies while maintaining their

exceptional quality image.

Pricing

Within the healthy lifestyle community, quality and price are transposable. When Starbucks was

initially launched they prided themselves on quality products and services which came with a

luxury price. In order to sustain the same high-quality for their food products, Starbucks offers a

steep price ranging from $8.00 to $10.00 for breakfast and lunch sandwiches, steel cut oatmeal

and egg white alternatives. Additional cost for specialized syrup flavors, extra dairy, and nondairy

creamers range from $0.50 to $1.00 per request. Starbucks offers three beverage sizes throughout

the year, a tall (small), grande (medium), and venti (large) in order to compensate for steep price

ranges. Due to costly seasonal flavors, Starbucks will offer a mini or 4oz size to consumers that

may not want to pay the original price. To include all economic classes, Starbucks also offers

lesser expensive pastries and sweet goods to provide services to the varying middle-class income.

These price fluctuations are justified by highly trained staff that are knowledgeable about beverage

mixtures. A clean and comfortable environment with unlimited WiFi access and complimentary

newspapers will support their prices.

Distribution

Starbucks utilizes a multitude of various distribution channels. The essential channel is a consumer

channel in order to maintain their personalized customer service marketing strategy. By choosing

locations near major intersections for high visibility is the ultimate advantage for the company.

MARKETING PLAN 24

As demand grows in suburban areas, Starbucks will open new stores in clusters to increase their

competitiveness.

Marketing Communication

By introducing Mobile Pour, an integrated technological delivery software for their consumers,

Starbucks positioned themselves as the ultimate consumer friendly, luxury delivery system.

Starbucks mobile application allows users to order their beverage and food beforehand and pick it

up at an allotted timeframe. By utilizing social media communication networks that target young

urban users; Starbucks is able to market to a greater and broader audience. By engaging in “likes”

and “comments” on the social media Facebook; Starbucks buy one get one promotions enhance

the consumer’s knowledge on the company’s advancements. My Starbucks Reward application

keeps track of the consumer’s purchases by rewarding stars which can be redeemed for future

purchases and discounts. Additionally, consumers are able to transfer money from their bank

account to a Starbucks Mobile Application for in-store purchases, provoking consumers to return

for either additional purchases or future consumptions,

3.5 Marketing Mix

Below are annual action strategies that will begin in 2014 and will continue subsequently. The

implementations will target transitions to a more health-conscious image.

2014 Projection

A new portfolio of delicious and nutritious Evolution Fresh ready to eat Greek Yogurt

Parfait products will be co-created by Starbucks and Dannon. This Dannon product will

be for exclusive distribution in the United States. Starbucks will begin offering these

MARKETING PLAN 25

products in the spring 2015 which will expedite a healthy and hearty initiative throughout

the upcoming years.

2015 Projection

Due to the green juice health trend, Starbucks will offer Evolution, a cold-pressed, high

pressure processed (HPP) green juice. It is made from more than a pound of green

vegetables consisting of 10 grams or less of natural sugars per eight fluid ounce serving.

Flavors include Sweet Greens and Lemon, Essential Greens with Lime, Organic Sweet

Greens and Ginger and Smooth Greens. An Evolution Fresh survey revealed that 43

percent of people in the U.S. have tried green juice.

2016 Projection

With the economy improving, many are ready to go back into the workforce. Women are

now seeking higher degrees and executive positions within their field. As summer

approaches, a quick and healthy meal maybe the answer. Starbucks will launch a Power

Lunch which the consumers can mix and match products of their choice. This will

include choosing 1) A choice of a sandwich, salad or bistro box, 2) A bag of chips,

popcorn, or pretzels ($1.75 or less), 3) A banana, that’s It® Fruit Bar, or Frappuccino®

Cookie Straw. and 4) each lunch also includes a bottle of Ethos® Water, all for $8 (while

supplies last, and no substitutions other than listed).

2017 Projection

Starbucks will be partnering with Anheuser-Busch in implementing the new Teavana RTD

non-alcohol premium tea beverages across U.S. channels. The new RTD product line will

integrate the handcrafted nature and epicurean flavors drawn from Starbucks and Teavana.

MARKETING PLAN 26

Starbucks brought Teavana in 2013 and has retained their reputation for high quality loose

leaf tea rich with antioxidants and health benefits.

3.6 Marketing Research

By identifying key competitors within the coffee industry such as McDonalds and Donkin

Donuts, Starbucks can research their healthy and hearty beverages with low calories and low-fat

food options. Starbucks has the ultimate leverage against their competitors since they do not

have to reform their negative image like Dunkin Donuts and McDonalds. Starbucks has always

had a positive health conscious images among consumers within the industry. Research will be

used to continuously improve the quality of Starbucks health conscious foods and beverages in

order to sustain their consumer’s positive body image lifestyle.

4.0 Financials

Forecast

Following the launch of the healthy and hearty menu, Starbucks earnings are projected to

increase by 19.86% from last year’s earnings. This projection is influenced by trend and an

anticipated drop in coffee prices by 3.07%. Total sales revenue is projected to be $21.4 billion at

the end of the fiscal year 2016. Q3 will account for be $5.3 billion and Q4 will account for $5.7

billion Annual Earning Per Share (EPS) is Forecasted at 1.89.

Refer to figure 3.1 to view revenue projection

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Figure 3 Revenue Projection

Coffee price decline: ($126-$130)/$130=3.07%

To increase demand, 15 % of gross revenue will be allocated to marketing efforts. This will

include activities such as, advertising, sales promotion, relation public.

Refer to table 5.1 for marketing budget

Table 5.1: Marketing Budget

Projected Revenue

$ 5,336,000,000.00 $ 5,200,000,000.0 Allocated Percentage

Advertisement on television $53,360,000.00 $52,000,000.0 1%

Radio Advertisement $80,040,000.00 $78,000,000.0 2%

Newspaper Advertisement $106,720,000.00 $ 104,000,000.0 2%

Billboard advertisement $106,720,000.00 $104,000,000.0 2%

Movies and shows product placement $240,120,000.00 $ 234,000,000.0 5%

Internet Advertisement $160,080,000.00 $156,000,000.0 3%

Magazine $53,360,000.00 $52,000,000.0 1%

Total Expenditures $800,400,000.00 $780,000,000.0 15%

Operations

MARKETING PLAN 28

In regars to operations a forecast of $8 million is is schedule to be allcocated in the first quarter,

$6.7million for the second quarter, $6.3million for the third quarter and $5.9 million for the

fourth quarter.

Refer to table 5.2 for operations

Table 5.2 Operations

5.0 Control

Starbucks will monitor progress towards goal achievement and taking corrective action when

progress isn’t being made. The company will use bureaucratic control, market control, and clan

control. Starbucks uses bureaucratic control by creating employee handbooks to cover rules,

policies, expectations, and standards. The market control will be used to regulate independent

business units, reports, and record of financial for each quarter of the year; market controls will

analyze profits and losses. Finally, the clan control is the corporate culture, beliefs, values, and

the informal relationships within an organization.

5.1 Implementation

With increasing poverty, we will donate 100% unsold food to participating U.S. stores. Food

Share has partnered with Starbucks in donating about five million meals to less fortunate

Operating Schedule Q1 Q2 Q3 Q4

Store operating

expenses

$(5,411,100.00) $(4,638,200.00) $(4,286,100.00) $ (3,918,100.00)

Other operating

expenses

$(522,400.00) $(457,300.00) $(457,200.00) $(429,900.00)

Depreciation and

amortization expenses

$(893,900.00) $(709,600.00) $(621,400.00) $(550,300.00)

General and

administrative expenses

$(1,196,700.00) $(991,300.00) $(937,900.00) $(801,200.00)

Total $(8,024,100.00) $(6,796,400.00) $(6,302,600.00) $(5,699,500.00)

MARKETING PLAN 29

(homeless, starving) individuals and families. If this initiative is successful, there is a possibility

of reaching over fifty million less fortunate (homeless, starving) and families by the year 2021.

Thus, increasing our corporate social responsibility (CSR) image. By doing this, we will exceed

the PESTEL factors in which we operate in.

5.2 Marketing Organization

Starbuck’s marketing department is led by Sharon Rothstein which holds the role of Executive

Vice President, Global Chief Marketing Officer. She is responsible for the company’s portfolio

of emerging brands, which includes, Seattle’s Best Coffee, Evolution Fresh, La Boulange, Tazo

and Teavana. Sharon leads the marketing team in developing Starbucks image in the retail stores

and Channel development; the team focuses on marketing initiatives, creative expressions,

advertising, and key business partnerships. Sharon is also responsible Digital Marketing team

and Global Category Brand Management. Sharon’s marketing team is broken down into six

different groups: Television Advertisement, Radio Advertisement, Newspaper Advertisement,

Billboard advertisement, Movies and Shows Product Placement, Internet Advertisement, and

Magazine Advertisement.

The company has a functional structure, geographic divisions, and product-based divisions.

Starbucks global marketing is delegated to Vice Presidents, Andy Adams, Kris Engskov, and

Cliff Burrows. Starbucks’ product-based divisions in its organizational structure. Addresses

product lines. The four main categories of product line are coffee, tumbler, food, and equipment.

By focusing on this aspect, Starbucks will effectively develop and create its products with

support from its organizational structure.

MARKETING PLAN 30

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