Sample Research Paper On Starbucks In Italy- Marketing Plan Report
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Market Analysis 1. What type of market segmentation process does the company seem to utilize? IS there a primary target consumer?
Starbucks Company has been consistent in innovation and providing quality products and unique services in reaction to the varying consumer tastes and preferences. Under the leadership of Howard Schultz, the Starbucks family emphasizes that customer satisfaction is the driving force behind their market-oriented innovation culture and forming a sustainable market advantage over market rivals (Yankelovich and Meer 122). Originally, the company applies demographic market segmentation strategy targeting high-end customers whose used quality and convenience as core factors in determining their level of preference (Mourdoukoutas par.3). With the continuous social-economic growth, the management noticed of an opportunity gap in the medium income consumers and students who capitalized on affordability and quality in determining the right choice. The company currently expands its demographic market segmentation by accommodating the tastes and preference of medium income earners, as well as college students. For instance, the Starbucks Company introduced wireless internet in all the restaurants targeting working executives and students who preferred an open and convenient place to relax while undertaking their normal duties such as research and social networking. Notably, the company has retained the larger part of its market segmentation with the high-end consumers, sharing the market with key rivals such as Dinkins Donuts and McDonald’s. The company introduced a mobile application compatible with the smartphones to enable customers access the company’s variety of products and services.
One of the key sustainability factors in the target market segmentation is continuous improvement of products and services. Michael Porters pointed out the effectiveness of the differentiation generic strategy that complements the unpredictable tastes and preferences of consumers. To win the consumers' loyalty and trust of the segmented market, the firm endeavors to provide differentiated products such as cold brewed coffee, iced coffee, chocolate beverages, kids; drinks and many others
2. How has the company standardized or customized their marketing efforts to reflect society, culture, and global culture?
Different markets across the globe differ greatly in terms of social and behavioral cultural practices. For a company to succeed in luring the target customer’s loyalty, it is paramount to appreciate the surrounding community’s culture into the strategic plan. Coffee has been associated with drugs due to its caffeine content – a factor that has deterred a considerable number of potential consumers from consuming the product. To blend the society’s cultural diversity, the management collaborates with a notable organization such as Multicultural food and hospitality association that provides the company with nutrition facts that would standardize the products on the market (Burrows par.10).
In its early years of operation, the management utilized a standardized marketing procedure of personal selling and maintaining a strong interaction with the consumers within the premises. The servers at the restaurant would engage the users in communication as a strategic approach to understanding their sentiments towards the products and services and their expected suggestions for improvement. Through the cultural connection, the firm was able to install music and wireless internet in response to the target consumers’ social culture. The firm has since adopted print and media advertising and also social network marketing to communicate the company’s differentiated products and services. In the year 2008, the company unveiled the social campaign platform My “Starbucks idea”; an online platform that enables consumers from various geographic markets to contribute to the firm’s product strategy and appreciate the cultural dimension characters. Consumers play a critical role in cohesive marketing thus enlightens the management about the market needs.
Starbucks Company maintains an ideal global marketing strategy that sells the company’s products using a common identity of ingredients and brand. The marketing technique eases penetration and recognition of Starbucks products and services across the globe. Starbucks premises are constructed and designed in a global to ease distinction from other rivals and deter other potential entrants from imitating the firm’s products. The essence of the Ideal Global marketing strategy is that all products and service bear a similar feature that reduces the firm’s marketing costs and fosters peer-to –peer marketing through consumer interaction with the products and services.
Cultural dimension aspects are a sensitive to a firm’s penetration of the target market and convincing the customers to purchase the product. Hofstede’s cultural dimension theory enlightens a company on the consumers’ perception and way of living. In particular, Brazilians have a high uncertainty of avoidance thus insists more on the quality of the product rather than affordability. In reaction to the diversity, Starbucks embarked on to educate consumers on the products ingredients and their impact on consumer health.
3 Conduct SWOT Analysis And Its Market Implications
SWOT analysis an assessment technique used by companies to evaluate their internal and external environments and capacity to sustain a long-term market advantage over existing rivals and potential entrants. The framework focuses on the firm’s material resources, level of technology and degree of market responsiveness towards varying consumer’s tastes and preferences.
Starbucks holds a strong market advantage due to its continuous innovation culture that has strengthened its brand to withstand market rivals. The firm employs differentiation strategy to produce different varieties of products that address consumer’s tastes and preferences. The product diversity expands the firm’s pool of risk thus strengthening the firm’s revenue earnings. Another advantage is that all company’s products are uniform across the 64 nations, and the premises retain a uniform design thus allowing easy identification by customers and reduces the product vulnerability to imitation.
The Starbucks is environmentally sensitive by linking with organizations such as National minority development council that facilitates building integrated supplier efficiency with raw material suppliers. Moreover, the management associates with coffee farmers to strengthen strong supply network and production of quality coffee.
One of the weaknesses likely to jeopardize the firm’s market advantage is the concentration of the market segment of high-earning consumers. The approach opens the gap for the market dominance of medium income earners and the youths whose unpredictable preference lures entry on new market players using the low-cost leadership penetration strategy. In the long-term, the firm could face high competition and reduced market dominance.
The company faces an imminent threat from new and existing market entrants such as Mc Donald’s and Dinkins. Further, in the aspiration to invest in Italy, the company faces market competition from key coffee brands such as Cappuccino and Espresso. The brands are highly reveled by Italian consumers and, therefore, the Starbucks need an advanced market strategy to penetrate the Italian market. The firm should invest more resources in research and development to maintain a sustainable competitive advantage. The firm also faces market threat due to market price volatility of coffee products. Moreover, the company could create a value-chain based system that forms a close relationship with the coffee farmers to build a monopoly wall of coffee products over other rivals.
Despite the high growth of coffee consumption across the globe, Starbucks has the opportunity of investing in other global nations especially in the African continent that is recording a rapid economic growth and rise in consumer income. The diversification strategy would capture the customers taste due to the brands strong global identity. To enhance, quick market penetration, Starbucks Company could apply collusion strategy with renowned coffee retailers to increase market dominance and revenue target.
4. What environmental, political, legal and cultural concerns exist in the expansion country?
Italy has a strong political system that operates under the three arms of the governance that include the Legislature, Judiciary and the Executive. The country boasts of a stable political environment that is favorable for Starbucks to invest. However, the company should be aware of the stringent policy formulation that could derail implementation of investment related policies.
The Italian government has a flexible legal system that accommodates the interest’s foreign investors. The government provides incentives for investors to accelerate their establishment and boost the country’s revenue. Investor companies are required to register with the trade departments. The foreign investors are exempted from capital gains legal taxation hence benefit from high returns (Castellani and Zanfei 166). Under, the European Union Umbrella, the Italian investors benefit from trade incentives such as the importation of raw materials from other nations such as Brazil.
The Italian government has been advocating for environmental conservation for low carbon emissions as well as green energy. The initiative supplements the European Union campaign on global environmental sustainability. Therefore, the Starbucks Company should adopt green energy initiatives such as constructing glass restaurants to reduce energy consumption.
The Italian market has a mixed culture especially in the urban sector due to the high number of tourists visiting the country. In that case, the target market for Starbucks, which concentrates in the urban sector, has varied social and cultural beliefs. Based on the Hofstede’s cultural dimension theory, Italians have a high rate of individualism and Uncertainty avoidance (Hofstede). Therefore, Starbucks management would require aggressive marketing to educate consumers on the products quality. Moreover, it would imperative to employ a combined labor force in Italian chains to boost cohesion and maintainable innovation culture.
"Italy - Geert Hofstede." Cultural Insights - Geert Hofstede. Hofstede center, Apr. 2015. Web. 4 Apr. 2015.
Burrows, Cliff. "Diversity and Inclusion." Starbucks Coffee Company. Starbucks, Mar. 2015. Web. 4 Apr. 2015. <http://www.starbucks.com/responsibility/community/diversity-and-inclusion>.
Castellani, Davide, and Antonello Zanfei. "Internationalisation, innovation and productivity: how do firms differ in Italy?." The world economy 30.1 (2007): 156-176.
Mourdoukoutas, Panos. "Starbucks And McDonald's Winning Strategy." Forbes25 Apr. 2013: n. pag. Print.
Yankelovich, Daniel, and David Meer. "Rediscovering market segmentation."harvard business review 84.2 (2006): 122.
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