STARBUCKS EVENINGS MARKETING PLAN

STARBUCKS EVENINGS MARKETING PLAN

MKTG 5007: Fundamentals of Marketing

Damiete Chamberlain Oyibo Nancy Nallelhi Mendoza Solis Jenny Mourao Juliana Esper Sabrina Souza de Moreas Figueiredo Tazmin Karmali

Date: April 15, 2015

Contents

1. STARBUCKS' OVERVIEW .................................................................................................................................................. 2 2. PRODUCT OFFERING AND CHANNEL STRATEGY ............................................................................................................. 3 3. SITUATION ANALYSIS ...................................................................................................................................................... 3 3.1 SWOT................................................................................................................................................................................. 3 3.1.1 Strengths ........................................................................................................................................................................ 3 3.1.2 Weakness ....................................................................................................................................................................... 4 3.1.3 Opportunity.................................................................................................................................................................... 4 3.1.4 Threats ........................................................................................................................................................................... 5 3.2 PORTER 5 FORCES ....................................................................................................................................................... 5 3.2.1 New market entrants: Low ............................................................................................................................................ 5 3.2.2 Bargaining power of buyers: Medium to High............................................................................................................... 6 3.2.3 Bargaining power of supplier: Medium to High Pressure.............................................................................................. 6 3.2.4 Threat from substitutes: High ........................................................................................................................................ 6 3.2.5 Rivalry among existing players: High ............................................................................................................................. 6 4. MARKET OVERVIEW AND TARGET MARKET ................................................................................................................... 7 5. MARKETING OBJECTIVES AND STRATEGY ........................................................................................................................... 7 6. MISSION STATEMENT.......................................................................................................................................................... 8 7. MARKETING MIX AND MARKETING OBJECTIVES ................................................................................................................ 9 8. FINANCIAL ANALYSIS......................................................................................................................................................... 11 9. CONTINGENCY PLAN ......................................................................................................................................................... 14 Works Cited........................................................................................................................................................................... 15

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1. STARBUCKS' OVERVIEW

Starbucks is a leading retailer of specialty coffee, with over 21,000 retail locations in 66 countries (Starbucks Company Profile, 2015). Today, along with high-quality coffees, the company also sells tea and other beverages, a variety of fresh food items and packaged food goods. The first Starbucks location was established in 1971 in Seattle, Washington, United States and expanded to Canada in 1987 in Vancouver, B.C. With just under 40 Starbucks locations per one million people in Canada, Starbucks has a far reach that exceeds even that in the U.S. per capita (Babad, 2014).

Starbucks' strategy has always been to differentiate itself from the typical coffee shop by providing each customer with a unique Starbucks Experience. The Starbucks Experience is built upon superior customer service, maintaining stores that reflect the personality of the communities in which they operate and building a high degree of customer loyalty (Starbucks Annual Report, 2014). Howard Schultz, the company President and CEO, defined the atmosphere in Starbucks as "creating communities in the third place between home and work" (Larkin, 2015).

Starbucks focuses on five criteria that define the company's work - handcrafted, artistic, sophisticated, human, and enduring (Millman, 2011). With an emphasis on quality, the Starbucks brand has become one of the most recognized and respected brands in the world and the company's main objective is to maintain this status (Starbucks Annual Report, 2014). The company's current strategy to achieve this is through a continued global expansion of its store base as well as diversifying its product mix (Starbucks Annual Report, 2014). It has become increasingly important for Starbucks to branch into different markets due to stagnant coffee sales (Wright, 2015). In Canada, Starbucks occupies the third positon in market share of coffee retailers, after Tim Hortons and McDonalds (with the introduction of McCaf?). Starbucks sales in 2013 totaled over $900 million (Euromonitor International, 2014). One of the new concepts that the company has introduced is Starbucks Evenings, a program in which select Starbucks locations will serve wine and beer alongside a small menu of shareable plates in an evening ambiance.

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2. PRODUCT OFFERING AND CHANNEL STRATEGY

The Starbucks Evening program, which initially launched in Seattle, Washington in October 2010, consists of a menu of wine and beer as well as a selection of a few light, savory bites available after 4pm (Franson, 2014). The wine options are available by the glass or bottle and the beer is sold in bottles only. In the U.S., the wine menu varies by location and offers a mix of local and international wines from both small and large wineries. In keeping in line with the chain's recent shift to steer away from a generic "cookie cutter" brand (Wright, Starbucks drinks in local flavour, 2014), this same formula for selecting a mix of local and international wines should be adhered to when the program is introduced into Canada.

The Starbucks Evenings program also commands certain premium details to enhance the high-end feel of the menu. The food items are served on elegant flatware and with silverware instead of plastic utensils, wine is served in contemporary stem-less goblets and beer is served in custom glassware (Friend, 2012). Starbucks Evenings locations are also selling the wine goblets which are branded with the Starbucks name printed with a selection of four unique phrases on them. The wine glasses are manufactured by Riedel, a high-end brand of glassware (Riedel Wine Glasses at Starbucks, 2012).

While employees at Starbucks Evenings locations will now have to meet provincial laws regarding alcohol service (i.e. In Ontario must be at least 18 years of age and have Smart Serve certification), guests of all ages are still welcome at all hours. As with regular orders at the store locations, food and beverage orders during the Starbucks Evenings are also placed with the barista, unlike full restaurant service. The regular coffee menu is also still available during the evenings.

Starbucks employs a system of relationships with suppliers to provide their snacks and pastries in their stores. The company's locations do not have full restaurant style kitchens and are not equipped to do more than brew coffee. This was a deliberate move by the company's CEO Howard Schultz who banned in-store baking in order to keep the smell of the coffee "pure" (Misonzhnik, 2013). The same strategy can be adopted in the Starbucks Evenings program where strategic relationships are set up with key suppliers to provide the stores with the food available at Starbucks Evenings while keeping the authentic smell which is an important component of the Starbucks brand (White, 2013).

3. SITUATION ANALYSIS 3.1 SWOT

3.1.1 Strengths Location: With just under 40 Starbucks locations per one million people in Canada, Starbucks has a reach that far

exceeds even the USA (The Huffington Post Canada, 2014). Starbucks Evenings introduction into the Canadian market would benefit from this extensive reach.

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 Customer loyalty: Starbucks has developed and maintained a devout customer base which they can pull from. It would not be hard to convince customers who are already in Starbucks as part of their normal routine to try out the Starbucks Evenings menu.

Diversity of product offerings: Starbucks as a leader in the coffee industry already has experience in diversifying their offerings. The company is known for its eclectic product options, allowing customers to tailor their drinks to their liking. Starbucks Evenings is another way to add to that diversity of product by naturally progressing into a different line of business.

Strong Brand: The Starbucks brand is one of the most recognized in the world - synonymous with quality. The brand plays on the ideas of the five filters such as handcrafted, artistic, sophisticated, human, and enduring (Millman, 2011). Starbucks Evenings still tightly intertwines with the Starbucks brand by going back to the original global campaign of "Meet me at Starbucks" (Interbrand, 2014).

Starbucks Experience: The Starbucks brand is more than coffee, there is a relaxed atmosphere associated with the brand and this can be translated into the Starbucks Evenings service. The design of Starbucks is deliberate to make customers comfortable by fostering interaction and enticing customers to stay (Larkin, 2015).

3.1.2 Weakness Strong brand: Starbucks first and foremost is a coffee brand. The company's strong brand identity might act as a

deterrent to its plans for diversification. Demographic: Starbucks Evenings identified target audience are women, aiming to appeal about 60% of their

population (Wright, 2015). This would lead to an exclusion of a still large demographic of men and those customers who are underage. Starbucks has not had reason to apply purchasing age restrictions at their stores, and this might prove a challenge to enforce.

3.1.3 Opportunity Untapped market: Starbucks Evenings presents an opportunity for Starbucks to take advantage of an untapped

market. While cafes serving alcohol have been widely popular in Europe and around the world for some time, this has not yet taken off in Canada. Starbucks has always been a pioneer in catering to the customer's needs. For example, Starbucks was one of the first stores where customers can go in and specialize their coffee order (Durham, 2007) this order process has been copied by other coffee brands worldwide. Now Starbucks can be a market leader by establishing Starbucks Evenings service. The Starbucks Evenings program would increase its market reach by including non-coffee drinkers in its clientele. Allowing the company to compete on a stronger base. Studies have also shown that coffee sales usually peak and decline at a certain point in the day. The study showed that 65% of all coffee is consumed during breakfast hours,

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