Starbucks’ Strategic Marketing Communication Free Essay

Introduction

Starbucks is one of the largest coffee retailers worldwide. It was opened in 1971, in Seattle by Gordon Bowker and Jerry Baldwin who focused on aggressive marketing (Starbucks, n.d.). Essentially, Starbucks has persistently placed more focus on progressive development as well as growth with regards to expanding its operations and launching new products, establishing faster networks, and also delivering services worldwide. The company deals in coffee products, Italian espresso, pastries, and also other forms of confectionaries (Starbucks, n.d.). Starbucks should launch a new product, green tea in the Australian market. Starbucks is known to be a coffee retailer and now seeks to offer the Australian market tea products branded as green tea. Therefore, there is a need to create an effective marketing communications product launch for the product to thrive in Australia. Product launch is important as it is decisive in securing the success of the new product. It is essential to communicate the positioning of Starbucks’ new product as well as leverage its affiliate brands so that it can be successful. This paper is a strategic marketing proposal presenting Starbucks’ marketing communication for the new product, green tea in Australia.  

 Porter’s Five Forces Model Analysis:

Industry Rivalry

Starbucks is one of the most renowned and competitive coffee retailers in Australia but still faces tough competition within the coffee retail industry. Dunkin Donuts, Costa Coffee, McDonald’s, and Café Coffee Day are some of the main competitors to Starbucks (Lewis, 2017). Moreover, the competition has been steep as some big coffee retailers have waged a tough competition by swiftly responding to the growth in the specialty coffee industry through the introduction of their versions of supermarket brands (Iacobucci, 2017)

. It makes it suitable for Starbucks to launch this new product in order to overcome the competition waged by its rival competitors. The green tea brand will be launched in a manner that it has its supermarket brand. 

Potential for new entrants

The Australian coffee market has different coffee brands, restaurants, and coffee retailers. Starbucks is one of the top coffee retailers and therefore enjoys unprecedented customer loyalty within the market although there have been constant new entrants into the market from time to time (Lewis, 2017). There are minimal barriers to limiting new entrants into the market. In the coffee industry specifically, high premiums are not placed on economies of scale. In Australia, Starbucks is a big company that has national distribution with regard to the coffee industry and thus is capable of giving some discounts through bulk purchases and suppliers (Hooley et al., 2017). To overcome a large number of entrants into the industry, the new brand will be launched and distributed nationally and bulk purchases will be offered discounts that will enable the new product to thrive by gaining a competitive advantage over the new entrants in the industry. 

Substitute Products

Substitute products have been a big threat in this industry. Tea has always remained to be a substitute for coffee and is recognized worldwide. In Australia, Starbucks is providing instant coffee and Teavana® teas to its customers which indicates that Starbucks faces a little threat of substitute products (Honack & Waikar, 2017). Launching the green tea product will even boost its competitive advantage and lower the threat of substitute products even more. Therefore, green tea will be launched and provided in the retail store as a substitute product to meet the needs and preferences of the consumers. 

Bargaining Power of Buyers

In this sector, the main purchasers of coffee are mostly individual customers who are not regarded as strong bargainers. Furthermore, the buyers are not aware of the particulars of the coffee industry and tend to find themselves lacking the knowledge of bargaining. Though they have the option of switching to other competitors suppose Starbucks does not meet their needs (Todorov & Akbar, 2018). Therefore, Starbucks faces a minimal threat from the buyers’ bargaining power. This paves way for launching the new product (Syed, 2016). Due to the low bargaining power, it makes it suitable to launch a product that possibly will be profitable. The product will be launched and fairly priced to avoid customers from defecting since they have low bargaining power. 

Bargaining power of suppliers

The bargaining power of suppliers can increase suppose the tea suppliers hike prices for the tea leaves which are utilized in producing green tea or by reduction of the tea leaves’ quality. Tea leaves suppliers mainly own small to medium-sized farms and often sell them to process via local markets (Honack & Waikar, 2017). There is no alternative for tea leaves for producing green tea but a large number of farmers producing the tea leaves makes it quite easier for buyers to evade the farmers’ obligation which also ends up lowering the suppliers’ bargaining power. Marketers tend to have more advantages than suppliers. Therefore, it can be deduced that marketers have higher bargaining power than suppliers (Miller et al., 2016). The green tea product that will be launched will take advantage of the low bargaining power of the suppliers which will help in minimizing the production cost. Low production costs will lead to the success of the new brand.

Ansoff’s Matrix 

The Ansoff matrix suggests four marketing strategies including; product development, market development, market penetration, and also diversification. Because Starbucks has been in operation in Australia for the last 19 years and has remained reputable, the Australian market is now old for Starbucks. Australia has a big population (Lewis, 2017). As far as new brands are concerned, Starbucks is launching a new product, green coffee in Australia to act as a substitute product for coffee. It is well known that Australia is considered a potential market having lots of opportunities for Starbucks to grow its brand. Therefore, Starbucks should adopt the market development strategies to tap the Australian market with the new product and by achieving its strategic brand positioning as an affordable and high-quality tea (Miller et al., 2016). As far as the Australian market is considered, the menu of Starbucks has a lot of different types of food and beverages (Patterson et al., 2010). More so, the launch of the new product will top up the menu. Therefore, Starbucks needs to adopt market penetration strategies that will help in stopping the erosion of Starbucks’ market share in Australia.

SWOT Analysis

Strengths
  • Starbucks has a strong brand image due to its popularity in the industry. It has a high volume of loyal customers who keep increasing from time to time. 
  • It also has a strong financial performance having $26.5 billion in revenue annually and is found to have the strongest financial position (Patterson et al., 2010). 
  • Starbucks also has several stores in the country and continuously grows.
  • It also has an extensive international supply chain that acts as a backup for raw materials thus ensuring a continuous supply of raw materials (Patterson et al., 2010).

These strengths put the company in a situation whereby it can comfortably launch the new product and be successful. 

Weaknesses
  • One of Starbucks’ weaknesses is the high prices of its products. Starbucks’ offerings appear to be quite more costly than those of its competitors like McDonald’s. High prices minimize the extent of affordability among consumers and this significantly affects the success of the new product being launched. 
  • Product imitation is another weakness since Starbucks’ products are not that unique and tend to be easy to imitate by other organizations. 
  • The recall of in-demand products that Starbucks tends to do sometimes is another weakness that is negatively impacting its brand image and further resulting in losing its customer base (Patterson et al., 2010). 

These weaknesses limit the probability of the new product thriving. 

Opportunities
  • Starbucks has the opportunity to expand into developing markets. It is financially stable and able to penetrate remote markets of Australia which is vital for the success of the new product (Miller et al., 2016). 
  • Starbucks is also capable of diversifying its business operations such that it will improve its general revenue growth opportunities. This will strengthen the new product and enable it to be successful. 
  • It also has the opportunity of introducing new products. This makes the launch of the new green tea product viable and effective (Lewis, 2017). 
Threats
  • The biggest threat is the high competition from the low-cost coffee sellers which is threatening Starbucks’ future stability. It also threatens the success of the new product to be launched. 
  • Product imitation also causes a threat to Starbucks’ uniqueness which further creates loopholes for competition (Patterson et al., 2010). More so, it also affects the effectiveness of the new product to be launched. Imitation affects the success of the new product. 

Defensive strategic marketing plan

Signaling

Starbucks will use this strategy in announcing its intent to launch a new product. The announcements can be done through newspapers, press releases, trade journals, or social media posts. By doing this, the company will be able to refrain potential entrants from getting into the industry by utilizing the retaliation threat. In essence, the higher the alleged likelihood of retaliation as well as its severity level, the lower the likelihood of being attacked by a competitor (L’AUDIT MARKETING & DE, 2019). This will enable the product to gain a competitive advantage and also to face minimal competition from the existing competitors.

Fortify and defend

Starbucks will have to step up to establish barriers for competitors. This will help to minimize the attacks and steep competition from competitors  (L’AUDIT MARKETING & DE, 2019). Since most companies enter an industry or produce a particular product because companies that exist are earning high profits which tend to motivate them to enter the industry, therefore, Starbucks can create barriers to such competitors by minimizing the entrants’ profit expectations.

Product proliferation

Starbucks has to launch this new product to fill gaps in the market, which is the substitute product for coffee (Honack & Waikar, 2017). This will enable Starbucks to flood the market will all varieties of products that meets the consumers’ preferences

Continuous improvements

Starbucks has to ensure that the new product’s quality is continuously improved (Honack & Waikar, 2017). The continuous improvement strategy needs a relentless focus on improving the cost of the product, the quality of the product, improving manufacturing processes as well as enhancing distribution of the product.

Capacity Expansion

Starbucks will have to produce a lot of green tea products and also open up more retails to increase the surplus of green tea products such that the industry will appear to have excess capacity for green tea products (Honack & Waikar, 2017). This will help in demotivating and keeping away competitors from producing a similar product.

Conclusion

To sum it all up, Starbucks is a reputable company both in Australia and worldwide. It has the opportunity for product growth by following this strategic marketing proposal, the company can effectively launch the green tea product and ensure it is successful. With regards to market positioning, the new product should be positioned as the best, most affordable, and high-grade green tea that is important to our health. The green tea will be branded as a high-end product which will make the customers feel a good vibe. The marketing communication of this product will take on defensive strategic marketing which will entail signaling, fortifying, and defending, product proliferation, continuous improvements, and capacity expansion. By taking into consideration this marketing communication plan, the green tea product will be launched successfully and thrive in the Australian market.