Marketing Audit For Staarbucks

1.0 Executive Summary

Starbucks is the leading specialty coffee and roaster retailer in the industry, with over 9,000 stores worldwide. Likewise, Starbucks strives to provide appealing products demanded by its customers. Its vision is to "establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow" (Starbucks.com). While most specialty retailers dream of becoming the leader in the coffee industry, Starbucks is the leading segment giant, with its main objective to establish itself as the most recognized and respected brand in the world. Through careful strategic planning, Starbucks has attained their goals of rapid expansion in the retail operations, growth in its specialty sales, the ability to pursue opportunities of their choice to provide sustainability of the Starbucks brand.

2.0 Table of Contents

1.0 EXECUTIVE SUMMARY 2

2.0 TABLE OF CONTENTS 3

3.0 ENVIRONMENTAL ASPECTS 4

3.1 DEMOGRAPHICS 4

3.2 CUSTOMERS 5

3.3 COMPETITION 6

4.0 MARKETING 8

4.1 OBJECTIVES 8

4.2 STRATEGIES 8

4.3 TACTICS 9

4.4 THE 4 P'S 9

A. Product 9

B. Price 10

C. Place 11

D. Promotion 11

E. Organization 11

5.0 CONCLUSION AND RECOMMENDATIONS 12

EXHIBIT 1 STARBUCKS INCOME STATEMENT 13

REFERENCE: 14

3.0 Environmental Aspects

3.1 Demographics

Although instant coffee will continue to be the dominate factor of in-home consumption, changing demographics such as the aging population will likely commence the decline of coffee drinkers as the baby boomers turn 55 years of age. This decline is the result of baby boomers cutting back on their consumption of coffee due to the low tolerance (geriatric physiology) of caffeine.

Moreover, coffee drinkers are more sophisticated then ever and thereby, their taste in coffee is requiring more then an ordinary cup of java. Trends of gourmet coffee made of Arabica beans and organic coffee produced without synthetic fertilizer and pesticides are the new wave of the sophisticated coffee drinker. These new coffee products introduced by Starbucks are trends that are driven solely by consumer demand for a more upscale coffee beverage both in and out of the home. Beyond the coffee habit, flavor improvements, Starbucks products will continue to be major drivers influencing brand selection and consumption. Although these are positive trends, Starbucks was faced with the growing crisis of the sustainability of coffee farmers. To address this issue, Starbucks along with Ecologic Finance have made available $8.5 million to ensure farmers and their communities that they will have enough money to last through their crop cycle. Starbucks believes that the funding it provides sends a message to the coffee and coca farming communities that they are sincere about their survival while the investment ensures the world's supply of coffee and coca continues. To continue the healthy relationship with the worlds coffee growing communities, Starbuck and Ecologic Finance plan to explore new alternative contributions to maintain the long-term sustainability of coffee farming cooperatives (Starbucks.com).

3.2 Customers

Starbucks does not provide data on its customer demographic information; however, Starbucks is seen as a place for everyone. Starbucks is a company that caters worldwide to individuals by providing handcrafted beverages leaving them with a unique coffee experience. Empirically speaking, Starbucks is viewed as the "third place" - a place between work and home. This "third place" is where a person can sit back for a while and enjoy a great cup of coffee. Additionally, Starbucks can be a place for where family, friends, and students can meet (Sancovich).

According to Steven Gray, a few years ago, a survey conducted by the Mintel International Group Ltd., revealed that 64% of American coffee drinkers preferred coffee shops where there is no waiting. Consequently, processing times posed big concerns to the Engineering Department at Starbucks. With Starbucks anticipating serving breakfast, the average vanilla latte could take even longer, which could lose a portion of its customers to places like Dunkin Donuts. As you can see from Figure 1 illustration by Steven Gray, Starbucks managed to cut approximately 30 seconds of processing time when they noticed that Starbucks employees had to dig into the ice bin twice to make a venti size iced beverage.

Starbucks prep time Dunkin Donuts Caribou Coffee

Tall black drip coffee-Under 20 sec. Small black coffee- 20 sec.

Small coffee of the day- 6 sec.

Grande vanilla latte-under 30 sec. Medium latte-60 sec. Medium vanilla latte-49 sec.

Venti Double Chocolate-Under 90

Frappuccino Blended Creme Large Coolatta-40-50 sec. Large Mint Snowdrift-55 sec.

To remain the leading coinsurer of gourmet drinks, its Engineering Department developed a "volumetric ice scooper" that helped to cut 14 seconds off the average preparation time of one minute for all blended drinks. Another area revamped to cut processing time was credit card purchases, which took an additionally 30 seconds. Starbuck now does not require signatures on credit purchases under $25 where Caribou's limit is set at $10. Moreover, to cut Starbuck's customer wait time from the time they get in line to the time the finish product is delivered, Starbucks created the "floater." The "floater" is an employee who is behind the lines directing the flow of work as well as taking orders to keep customers from feeling as if they are waiting in line. Although floaters add cost to Starbucks overhead expense, they feel that this was a wise decision since floaters have cut an additional 20 seconds from their service time. Likewise,