Starbucks – Marketing Audit

Table of Contents

Starbucks Marketing Audit 3
Executive Summary 3
Environmental Aspects 4
Demographics. 5
The growth rate of the US has been between 1.10% and .90% from 1999-2003. The market demands are constantly increasing. Their unique approach to expansion goes beyond the traditionally accepted methods. Starbucks has broken the rules and set a new standard amongst its competitors. Starbucks primarily chooses to focus on the demographics, psychographics, and lifestyle of their customers. Starbucks targets both males and females, ranging in age from 18-30 year olds, and middle to upper middle class. Starbucks caters to all needs; they offer non-caffeinated drinks, for children or non-coffee drinkers, sandwiches, sweets, and a variety of juices and pastries. 5
COMMUNITY 7
COMMUNITY 7
Culture 8
Markets 9
Market Needs 10
Market Trends 10
Market Forecast 11
Competition 14
SWOT Analysis 15
Strengths 15
Opportunities 15
Strengths 16
Global Presence. Starbucks has a widespread global presence. The company operates about 8500 retail store locations, the majority of which are company owned and operated across32 countries worldwide. The company’s widespread presence provides prevalent brand recognition and a strong customer base. 16
Weaknesses 17
Lower revenues and income per employee. The company generates lower revenues and income per employee as compared to the industry average. Its revenue per employee was $71,544 during fiscal 2004, as compared to the industry average of $110,841. Furthermore its net income per employee is $5294 as compared to the industry average of $9500. The company’s lower returns per employee as compared to the industry average reflect adversely upon its employee efficiency. 18
Opportunities 19
New products. Starbucks has expanded its beverage categories by signing an agreement with the wine and spirits group Jim Beam Brands to develop and market a Starbucks branded coffee liqueur drink. The partnership with Jim Beam Brands provides Starbucks with access to a nationwide sales and distribution network. It also offers a partner with a proven track record in product development and marketing. In the US, cordials and liqueurs represent a $4-5 billion opportunity and approximately 20 million cases. Liqueurs flavored with coffee or often mixed with coffee represent a substantial segment of the liqueur market. Additionally, US specialty coffee consumption is on the rise. Research indicates that there is a significant overlap between consumers of liqueurs and consumers loyal to the Starbucks brand which provides the company a strong revenue potential. 20
Threats 21
Marketing Strategy 22
Marketing Mix 25 Starbucks marketing information has been consistently accurate. When it has been wrong, sales have exceeded expectations. Based on the SWOT analysis and industry research, Starbucks current marketing decisions have been extremely effective and timely. They are targeting the global market, primarily in the Pacific Rim and Europe. They have increased pricing with little affect on demand. They have also improved their distribution and protected themselves from a slow US market. Their products have been consistently updated based on consumer demand. Success can be somewhat deceiving. Starbucks may have “left money on the table” by not being more aggressive, more targeted to local segments and not concentrating their efforts toward the global market. 34

Starbucks Marketing Audit
Executive Summary

The US specialty coffee market continues to have an increasing number of firms looking to enter the market. Starbucks must be aware of competition on all levels and maintain its operational performance if it is to retain its status as the world’s leading specialty coffee retailer. The company’s focus on taste, quality and customer service is consistent with the market