A PROJECT REPORT ON THE

MONOPOLISTIC MARKET “STARBUCKS

COFFEE”

SUBMITTED TO
SCHOOL OF MANAGEMENT
SCHOOL OF BUSINESS
GALGOTIAS UNIVERSITY
GREATER NOIDA (U.P)

GALGOTIAS UNIVERSITY,
GREATER NOIDA (U.P)
A PROJECT REPORT ON STARBUCKS COFFEE (MONOPOLISTIC MARKET)
In the partial fulfillment of the degree of Masters of Business Administration
at Galgotias University.

Undertaken By:
KRISHNA YADAV
KRITI
KRITIKA
MAYANK

Under the Supervision of

Assistant Professor – Ms. Isha Shrivastav
DECLARATION

We hereby declare that the Project

Report entitled “A STUDY ON
STARBUCKS COFFEE” done by us
under the guidance Ms. RASHI MITTAL
is submitted by Group 6 in partial
fulfillment of the requirements for the
award of Master of Business
Administration degree

DATE:
PLACE:
Table of Contents
1.0 executive summary Page 1
2.0 Market analysis 2
3.0 marketing
analysis
strategy 13
4.0 advertising 20
5.0 financials 20
6.0 Controls 31
BIBLOGRAPHY 49
1.0 EXECUTIVE SUMMARY
Starbucks is the biggest competition for any new coffee house

when they enter the market. They are also the biggest. They

have hundreds of locations all over the world. There are some

that have their own building and then there are those that are in

airports, schools, malls, etc. The main objective for Starbucks is

to be the most respected and recognized brand for coffee and

specialty drinks.

In order to achieve this goal, Starbucks must continue to grow

by expanding their locations and make sure they are introducing
new products and keeping their customers from going to other
coffee shops. They also need to make sure they capitalize on
the opportunities in other countries outside of the U.S., which will
help them grow even more in the global market.

Sam them happy employees make happy

customers that want to come back. All of Starbucks’

Lehnert Starbucks is

an all-around great company. They treat their employees well

because
employees are eligible for benefits and health insurance. Every

employee starts above minimum wage and they even employ

the students of any of the schools they are located in. Starbucks

is also becoming more environmentally aware. They are using

more products that are recyclable and they even have boxes

sitting out at all locations to recycle the sleeves of the cups.

Starbucks is also a big contributor to local charities, especially

the ones that focus on children, the homeless, AIDS research,

and the environment. Starbucks prides their company on being

a strong force in not only the market but its communities as well.

Starbucks plans on continuing to have college students and

business associates as their customers, but would also like to

target seniors more as well as parents and children.

2.0 SITUATIONAL ANALYSIS

Starbucks opened its first store in 1971 and now is in a

dominating position in the retail beverage industry. This
company itself is diversified into other related industries
including bottled water, and even the music retailing industry.
Even when a customer enters a Starbucks, many different types
of products are available. They provide bagels, souvenirs,
pastries, yogurt, wraps, fruit, Frappuccinos, Espressos, Tazi
teas, and many other items. They acquired Seattle’s Best
Coffee in 2003, which was a big competitor of Starbucks, but
now seems to be positioned slightly higher, for the highest

overall sales. Sam Starbucks uses hip,

contemporary design of all promotional, web-related, and other

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material to keep it appealing to young generations. This also
hits their target market of men and women ages 22-40. This
contemporary look and feel are unified throughout all their
material, so even the older target segments will feel younger
when they drink your coffee.

2.1 MARKET SUMMARY

Starbucks is mainly a first-mover company. They see the trends

and interests of their target market first and adapt to meet those
initial needs. For example, when Starbucks noticed that their
customers wanted to support socially responsible companies.
Starbucks began selling Product Red goods in November of
2008, enabling the supply of AIDS medicine for 3,800 people a
year. This, along with other contributions made by Starbucks,
helped the brand in the minds of their customers.

The difficult task ahead for Starbucks is to keep adapting to the

products, packaging, and atmosphere customers want, to stay
ahead of the competition. Taking advantage of new ways of
promoting Starbucks with the growth of smartphones, social
networking, and digital media is another task. This company
needs to continue what they have been doing in adopting these
new promotion techniques.
2.1.1 MARKET DEMOGRAPHICS

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Source: Internal Research June 2010

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Source: Internal Research June 2010

Demographic Breakdown of Target Market:

- Urban dwellers
- Ages: 18-40

- Gender: Men & Women

- Income: Depends on life stage, but relatively high

- Occupation: Depends on life stage, ranges from college

students, and faculty members, as well as persons in
managerial, executive, and professional positions.

- Values: People who care about their employees, global

issues, and the environment for example. They also
care a great deal about having a high standard of
customer service.

- VALS Results: Innovators, Achievers, Experiencers, and

Thinkers

- Technology: Our target market consists of many MAC

users. These people are the ones who love to get the
newest technology as soon as it is available. Where you
see the advertisements for the latest smartphones is
where Starbucks customers are looking.

Sam (Keep in mind the alliance with Apple

for selling music) Starbucks has done an effective job

Lehnert at promoting

themselves on social networking sites.

2.1.2 MARKET NEEDS

What does the market need? That is the question. The answer
lies in the ability of the company to adapt to changing ways of
communicating with customers. Customers easily get tired of
the clutter involved in traditional advertising and promotion
techniques, but to keep innovating and thinking of new ways to
reach these customers is what is needed for Starbucks to
maintain its dominance.

Although it may not be a real “need” of customers. The energy

drink industry is growing and there is great potential in
expanding and creating a different type of beverage that could
help diversify Starbucks. Something comparable to Monster
Energy’s “Java
Monster.”
2.1.3 MARKET TRENDS

There are many trends affecting the different life stages of our
target market. Starbucks tries to keep its focus balanced
between the college age, post-graduation and young family age,
and the 30-40 year olds. One effective way that companies with
similar target markets have been promoting themselves is
through social networking sites. Starbucks has been much time
invested in this, since they have a much easier time effectively
Sam
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strong presence on Facebook, Twitter, and many others. They

seem to targeting their market through that new media
advertising.

We conducted a survey at Rivertown Crossings Mall in

Grandville, Michigan which resulted in 95% of teen coffee
drinkers thinking that Starbucks is “cool” and a “high-end” brand.
That group of coffee drinkers made up almost 60% of our 18-24
year old survey takers.

STARBUCKS Current Growth and Potential Growth

 Source: Internal Research June 2010

2.1.4 MARKET GROWTH

-College Students are increasing at a rate of 4.6% annually

- “9 to 5ers” (Business Professionals) are growing in the

downtown area at a rate of 3% annually

In the Starbucks market, there is significant room for growth

in the college student market. They also, have significant room
for growth in the energy drink industry. As the world ages,
Starbucks needs to continue to establish itself among younger
people, so when they become prime ages to start drinking
coffee, they will choose Starbucks. There isn’t much to change

Starbucks is a global coffee chain that operates in a

monopolistic competitive market. This means that it faces many
competitors that offer similar products, but it differentiates itself
by creating a strong brand image and customer loyalty. Some of
the strategies that Starbucks uses to maintain its market position
are12:

 Product innovation and diversification: Starbucks constantly introduces

new products and flavors to cater to the changing tastes and preferences of
its customers. It also offers a variety of food items, beverages, and
merchandise to complement its coffee offerings. Starbucks also expands its
product portfolio by acquiring or partnering with other brands, such as
Teavana, Tazo, La Boulange, and Evolution Fresh.

 Customer experience and loyalty: Starbucks creates a unique and

consistent “Starbucks experience” for its customers by providing high-
quality service, comfortable and inviting ambiance, and personalized
interactions. Starbucks also rewards its loyal customers with its loyalty
program, Starbucks Rewards, which offers free drinks, discounts, and other
benefits.
 Social responsibility and sustainability: Starbucks demonstrates its
commitment to social and environmental causes by sourcing its coffee
beans ethically and responsibly, supporting farmers and communities,
reducing its environmental impact, and engaging in various charitable and
philanthropic activities. Starbucks also communicates its values and
mission to its customers and stakeholders through its website, social
media, and annual reports.

 Global expansion and adaptation: Starbucks operates in more than 80

countries and regions, and it continues to explore new markets and
opportunities. Starbucks adapts its products and strategies to the local
culture and preferences of each market while maintaining its global
standards and identity. Starbucks also leverages its joint ventures,
licensing, and franchising agreements to enter and grow in different
markets

2.2 SWOT ANALYSIS

2.2.1 STRENGTHS

-Already Have Market Share | Because Starbucks

already has a dominant share of its respective market,
they have the resources to buy out competitors if they
need to. The number of financial resources also allows
Starbucks to purchase in greater quantities for various
supplies and in turn, pay a lower price than competitors
would get. Since only a few of the competitors can take
advantage of the “economies of scale,” this narrows the
industry down to a
sam e powerful players including

McDonalds, Nestle, Kraft, and some of the big gas

Lehnertcompanies like Speedway and Exxon Mobil.

-Perceived as Premium Quality | Our target market

associates Starbucks as the premiere brand for coffee.

-Unique, but Established Brand Experience | Not only

do they think Starbucks is the premiere brand, but they
come to Starbucks for the ambiance. They come for the
great service and the overall atmosphere provided.
Having this atmosphere established is a huge
advantage.
-Sustainable Brand Image | The Starbucks brand is an
easily sustainable one. It needs to be constantly
adapted to new forms of media and keep the visual
appeal that makes it accepted and praised by college-
age customers and older.

2.2.2 THREATS & COMPETITION

- Regionally Corporate Coffee Shops (Biggby, Tim

Horton’s)

- Dunkin’ Donuts

- Gas Stations and Convenience Stores

- McDonalds and other Fast Food Restaurants

- Local Coffee Shops

 san dbox retailers

-
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Nestle, Kraft Foods (Maxwell-House,) and other instant
coffee sold at big-

Source: Bing Images

2.3 COMPETITIVE ANALYSIS

Source: Internal Research June 2010

Sam
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 Source: Internal Research June 2010

Source: Internal Research June 2010

Currently, it looks like Starbucks has differentiated itself from

convenience stores, home-brewed coffee, and specialty coffee
shops. Although specialty coffee shops are still ahead of
McDonald’s, Starbucks has established itself as a higher quality.
The future

Sam released a home-brew that will be at

the higher end of the home-brewed coffee but

Lehnert looks like it

 will be a battle between Starbucks and McDonald’s. Also,
Starbucks is
cheaper than coffee shops. Starbucks has been able to
effectively market itself as the premiere brand of coffee, and as
long as it keeps the interests of the target in mind, it can remain
just that.

One of the reasons many customers will purchase their premium

coffee at McDonald’s is because of the advertising they ran to
show it’s not just a cheap coffee, they made it high-end coffee.
McDonald’s has also done a lot in the past ten years to show
they are socially responsible, which appeals to a lot of the
current customers at Starbucks.

2.4 SERVICE OFFERINGS

2.4.1 AT LOCATION

Starbucks provides customers with high-speed internet access,

so customers can continue to connect online through their
smartphones and laptops while they sip some coffee.
Customers view the menu and decide how they want their drinks
and the Starbucks team gives them what they want.

2.4.2 ONLINE

Starbucks provides the ability to add money to Starbucks cards

online. They provide information on new products, social
responsibility activities, and other things to promote the brand.
They allow customers to learn about the personality of the
company at their own pace and keep it visually interesting for
them.

Customers can access the online store to purchase coffee for

home brewing as well as other related items.

2.5 KEYS TO SUCCESS

The keys to the success of Starbucks are:

 • The unique, innovative, upscale atmosphere that will
differentiate Starbucks from
McDonald's

Sam  The establishment of a community hub for

socialization and entertainment.

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• The best coffee and bakery items.
• Keeping their products as a status symbol
• The huge online presence through social networking and
other mediums

2.6 CRITICAL ISSUES

How will Starbucks differentiate itself from McDonald's Premium

Coffee to avoid a significant loss of market share?
How can Starbucks take advantage of new technology to keep
the perception customers have of them?

2.7 EXTERNAL-ENVIRONMENT
Sam
Lehnert Source: http://www.shell-livewire.org/store/1031237396.934.png

2.7.1 TECHNOLOGICAL ENVIRONMENT

Smartphones, interactive TV, social networking, and other new

forms of media are changing the way people connect.
Technology is changing and innovating faster than ever before.
Laptops are getting lighter, smaller, faster, and come with more
storage. Screen resolution is increasing and people demand to
see visually pleasing websites.

2.7.2 SOCIAL/CULTURAL ENVIRONMENT

People get sick of the traditional ways companies advertise.

They don’t like the clutter in advertising and this is huge for
Starbucks customers. Social networking has taken over and
controls the way people connect and businesses.
2.7.3 POLITICAL/LEGAL ENVIRONMENT

In America, Democrats and Liberal ideas are in power. This

means that the federal government wants to limit monopolies
and domination of industries. This is something that needs to be
followed. The social responsibility activities Starbucks
participates in counter much of this and put the company in good
standing.
2.7.4 ECONOMIC ENVIRONMENT

Economic recovery has taken place in the first quarter of 2010.

Predictions for the near future are looking good, slowly giving
more confidence to consumers. Economic spending

2.8 MACRO-ENVIRONMENT

The retail coffee industry in this area experienced rapid growth

at the beginning of the decade and is now moving closer to the
mature stage of its life cycle. Many factors contribute to the large
demand for premium coffee: The student population in college is

Sam huge source of demand for coffee

retailers, the cold and damp climate is extremely

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conducive to coffee consumption, and current trends in the
Northwest reflect the popularity of quality coffee and specialty
drinks.

The popularity of the Internet is growing exponentially. Those

who are familiar with it, have higher expectations for the visual
appeal of sites. Starbucks provides an effective website that
meets the needs of its customers.
3.0 MARKETING STRATEGY
Howard Schultz prided himself on making sure that Starbucks
never grows too fast outside its culture. The same goes for its
marketing strategy. This culture consists of two key points.

The first is our image. When you walk into a Starbucks, a

friendly face greets you. The color scheme is very earthy and
warm. The same thing can be said about the smells. We want to
make it a comfortable place for you to relax. It could even be
where you and your wife met, or where you heard your favorite
band for the first time.

The second is, well, you.

You are our culture. We want to make sure that you come first.
This is why our baristas do their best to remember your regular
drinks. And since our culture is you, we know just how to reach
you. Whether this be via a mobile phone app, our website, or in-
store, we are there for you.

The goal over the next 3 years for 2011-2013 is that we stand to
make our company more social, streamline and shape up our
image, and get back to our roots.
 Source:
B
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g

I
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s

3.1 MISSION
Our mission: to inspire and nurture the human spirit – one
person, one cup, and one neighborhood at a time. This mission
statement still stands true today. You will notice the nurturing of
the human spirit upon walking into any of our inviting locations.
We inspire people just by having all of the friendly baristas
remember your name and just smile. We inspire each
neighborhood just by being there for it and by being the new
meeting spot for everyone.

3.2 VALUE PROPOSITION

Starbucks will have a year-by-year focus when it comes to our
marketing goals, focusing on three specific areas we can
improve upon:

- 2011: Build a stronger relationship with customers of Apple

products via an app that will place orders
-2012: Using an ad campaign strategy to pull for regular and
deaf coffee in-store -2013: Improve our image in the area of
market saturation.

3.3 CUSTOMER EXPERIENCE

Sam Since one of the prime aspects of our

culture is our image, we try to make the customer

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experience a quality one. The first thing you notice when walking
into one of our locations is that it smells amazing. It makes it an
inviting experience and then you notice all the available
comfortable seating. You then think to yourself, “Who is that
great band that is playing on the P.A.?”. Well, thankfully, we are
selling that CD, both in-store and digitally via iTunes and the
mobile iPhone/iPod Touch/iPad Music Store. The last aspect of
the experience is the cool earthy green tones of our cafes.

This all leads to the feeling of being at home, in your study.

We’ve noticed a lot of people will spend hours working in our
cafes. This is why we’ve made it feel like this is a place to get
work done and be productive. That’s why we have partnered up
with AT&T to give you the fastest wireless internet available.

3.4 MARKETING OBJECTIVES

Starbucks has grown from its original image of the Seattle
Grunge rocker to an “anyone can drink coffee” regular Joe.
Having said that, being that we are in 55 countries does make
for a specific audience that comes in.

Here are just a few:

• Mothers: This one is primarily due to our tasty Frappuccinos.

They’re the kind of demographic that doesn’t necessarily like
to drink straight black coffee, but they like the taste. They also
have the income to spend on the large sizes and premium
options. Their age ranges from 30-50.
• 9-to-5ers: These savvy groups of people never have time to
brew their pot, much less have breakfast, but we are on their
walk to the office. They will grab a pastry or bagel along with
that classic black coffee. It gets their day started. Male or

• sam e 2.0: This group is the ones that follow us on

Twitter, the ones that like every status

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23-45, the 9-to-5ers are a great demo.
female, from

of ours on Facebook, the ones that download our app off

iTunes. They are young and hungry.

With the following promotions (see section 3.9.3), we hope to

increase foot traffic into our stores from all of these groups by
20%.
 Source: Bing Images

3.5 FINANCIAL OBJECTIVES

With the marketing that we have in place from promotions and
products, we hope to steadily improve our revenue stream by
10% percent in 2011, 15% in 2012, and 30% in 2013

Source: Internal Research June 2010

3.6 STRATEGY PYRAMIDS

The following are Starbuck’s three keys to success:
- Continue to use our social media efforts to create a foothold
within the Web 2.0 Generation demographic.
- Continue to deliver a quality product, ensuring that all the
beans we use are fair trade and from a quality source. - Making
sure that our product is available to the markets that demand it.

Sam
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3.7 POSITIONING
At Starbucks, we position ourselves as high value and moderate
cost. The reason is that the cost of a coffee shop that is high-end
and family-owned will have its products priced higher because
they think that people will pay those high prices. After all, the
product is good. Well, we realize that times are tough: Trust us,
we know. That is why our prices are just a bit lower. Don’t worry
though, as the product will never change.

Regarding the exact positioning of our company compared to the

rest of the market, we feel it is fair. Most customers know that we
have a quality product, and they will pay a modest price for it.

3.8 MARKETING RESEARCH

We will continue to watch what our competitors do and innovate
upon that in a way that works for Starbucks. Starbucks realizes
that we are not the only one in the market anymore. We have to
know how to deliver our product to you in a comfortable and
friendly way, which is why we will do this research.
3.9 MARKETING MIX
A portion of our marketing will reflect the social aspect of our
customers, while the other half will focus on rebranding many of
our locations and strengthening our core product.

As we mentioned before, our culture wouldn’t exist without the

product that you love so much.

sam bas possible. We will never sacrifice

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taste for cost.

Since the beginning, we’ve prided ourselves on obtaining the

best and fair trade coffee

Building off this core product will be exciting over the course of
the next three years, but the marketing mix will prove that it’s still
about the coffee.

3.9.1 PRODUCT AND SERVICE STRATEGY

We will continue to serve the mass customization culture; We’ve
seen great success with the “however-you-want-it” Frappuccino
(Chicago Tribune) and will apply the same aspect with our
regular coffee. The “however-you-want-it-coffee” will allow
customers to add anything to their coffee for a fixed price. This
will bring in existing customers, knowing that they can get their
favorite drink for a flat rate without worrying about being charged
extra for things like sugar, cream, and/or ice.

3.9.2 PRICING
Back in January, we had to raise the price of certain products in
several of our larger markets. Many customers did not like this
and complained of defecting to Dunkin’ Donuts (Daily Finance).
These complaints were found on Twitter. To fix this, we will bring
back prices to their pre-January prices.

Regarding the “however-you-want-it” regular coffee line (see

section 3.7.1) the price model we will use is 1.50 for small, 2.00
for medium, 3.00 for large.

Source: Bing Images

 sam
3.9.3 PROMOTION

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We plan on a strong social media campaign. For starters, our
Starbucks iPhone app will post to Twitter once you place an
order. This will make promotion a viral effort, promoting from
user to user. This can be opted out of if a user feels that the
feature is too obtrusive.

Another feature we plan to implement in our stores is the use of

QR codes. Smartphone devices and points towards a link can
scan the QR codes. Links will be exclusive codes and
information on the product.

Regarding the partnership we established with Apple back in

2007, new customers of Smith

these customers. This is one of our strongest demographics
are

(see section 3.4) and

Lehnert Apple

computers, iPhones, and iPods will get a 25-dollar gift card to

start a relationship and further strengthen it.

3.9.4 PLACE
Over the years, we have gained considerable flack for market
over-saturation. To combat this, we will go and re-brand over
500 of our locations in markets that have considerably less
demand for the product, or the competition is too strong in
markets where regional coffee chains and shops.

We have had much success with Seattle’s Best Coffee brand

and placing it within many different retail locations (i.e. Subway,
Burger King, grocery stores) (Reuters). Rebranding certain
locations will help improve our image of over-saturation in the
market where consumers are not familiar with Seattle’s Best.

If there are locations of Seattle’s Best or placement of the brand

within 30 miles, we will rebrand some Starbucks locations as a
local shop. We have had success with this in the past and will
continue the procedure further. (Telegraph)
4.0 ADVERTISING

This Starbucks marketing plan for the years 2011-2013, like any
other marketing plan, will rely a lot on the advertising part of our
strategy. For the most part, Starbucks relies on in-house
advertising within the company. We feel that the people who
embody the Starbucks mindset and are enthusiastic about the
company’s values and future will be the people who are
employed at Starbucks.

The purpose of any advertising plan is to increase traffic to

increase sales. At Starbucks, we also believe in emphasizing
building the brand. Starbucks already is a well-respected and
well-known brand; we simply want to keep that integrity.
Starbucks has always been an innovative company. For
instance, leading the way in social media channels and creating
a need in people to have their daily cup of joe from no place
other than Starbucks. They are also socially responsible,
supporting causes such as the environment and AIDS. They use
recycled products and allow you to bring in your own

Sam's portion of being socially

responsible. By having a strong advertising plan, we will be sure

to Lehnert mug to

use, if you wish. One idea that we wanted to follow through with
is the service
achieve the goals that we have set for ourselves, both financially
and standards as a company.
 Source: Bing Images

5.0 FINANCIALS
Starbucks has been a company that has served the people in
America for close to forty years now. Starbucks Company over
the last few years has seen some very hard times according to
Starbucks newsroom, the company has made some major
changes in the way that they do business now, and Starbucks
says they have seen sales rise from those changes in this first
quarter of 2010 according to Starbucks newsroom. With the
global market for coffee being in such high competition
Starbucks had to create an idea for innovation and they did so in
early 2009. In 2009 Starbucks listened to their customers and
found a way to bring Starbucks high-quality coffee to the instant
coffee market. Starbucks revealed a line called Starbucks Ready
Brew which has been successful in the American market and is
soon to open in Japan and the U.K.

5.1 3-YEAR SALES AND EXPENSE FORECAST

Sam launched their new coffee called

Starbucks Via Ready Brew; this was an idea from

 Lehnert Starbucks

has shown a significant need to serve their customers better.

Starbucks in 2009
customers that Starbucks had seen a need for. Starbucks
developed an instant coffee not like the traditional instant coffee
that you are used to. Starbucks has developed an instant coffee
that looks tastes and feels like coffee you have just brewed, for a
whole new instant coffee experience. Starbucks sales are going
to increase because of this new product on the market.
Starbucks over the last couple of years have tried to cut costs
and they have. According to Starbucks newsroom, Starbucks
has exceeded their cost-saving measures by 30 million bringing
the total savings to 580 million. Starbucks is going to continue
their cost-cutting measures and they are going to keep saving
money in every way they can without affecting the performance
of our customers.

5.1.1. SALES FORECAST

Starbucks has innovation and excellent customer service so our

sales are expected to grow in the three coming years 2011,
2012, and 2013. Starbucks expects sales in 2011 to grow at
least 4.5% with the economic situation seeing the end of the
tunnel people are going out and spending more money. In 2012
sales should grow another 4.7% with the via ready brew hitting
new markets soon Starbucks has an opportunity to move to new
markets and expand its new product. In 2013 Starbucks should
have sales growth near Sam
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5% By then the economic situation should be coming to an end
and more people will have jobs and they will have extra money
to spend on higher goods and they won’t have to substitute for
cheaper coffee in the morning on their way to work.

Source: Internal Research June 2010

 Starbucks Sales forecast
The year 2011 2012 2013
Expected Sales (Billion) $10.21 $10.69 $11.22

These numbers are calculated from the previous year’s sales at

Starbucks according to
Forbes. We looked at previous years and the difference in sales
numbers between the years. Via ready brew from Starbucks just
came out and they are looking to expand sales in different
countries this affected how we came up with the sales numbers
along with other products that Starbucks is looking at bringing to
the market. Most of these things came from Starbucks news
where they tell investors about possible items that they are
intending

Sam ta brings to the market. We used

financial numbers from 2009 on forbes.com and with my

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research we looked at numbers that said there was intended 4
percent growth at Starbucks. With Starbuck's new products and
marketing techniques we estimated the sales growth for the next
three years and used the numbers from 2009 and applied my
sales percentage growth and came up with the numbers for
2011-2013. The numbers are close to the previous three years in
terms of differences in sales between the years.
 Source: Bing Images

5.1.2 EXPENSE BREAKDOWN

Starbucks has lots of expenses with operating all of their

stores. Starbucks has long-term debt that they make payments
on twice a year. This debt is from doing regular business and
making improvements to locations worldwide. Starbucks has
accounts payable that they buy some of their supplies and
goods from, these change month to month according to how
busy the stores are and how much merchandise they need to
purchase. Starbucks has many months that advertising is very
important, they need to attract people to stores over the holidays
and this is where Starbucks sees increased
Sam advertising expenses. Starbucks has

many different expenses from running a company

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with so many locations worldwide.

Expense Column (Numbers in

Millions) 2011 2012 2013
Long Term Debt $548.8 $548.4 $548.0
Accounts Payable $210.2 $220.6 $215.6
Advertising $123.3 $120.2 $119.3
Research & Development $6.3 $6.5 $6.8
Rental/lease agreements $667.0 $620.0 $580.0
Interest $2.3 $2.0 $4.0
Coffee Bean purchase agreement $241.3 $243.6 $245.9
 Source: Internal Research June 2010

5.2 YEARLY SALES AND EXPENSE FORECAST

Starbucks is focused on bringing the highest quality coffee to

the market while providing excellent customer service.
Starbucks sees an increase in sales and expenses from
November through January. This is from all the Christmas
shoppers out and about doing all of their shopping before
Christmas and Starbucks has increased store traffic and people
buying gift cards and stocking stuffers. In turn, Starbucks has
increased costs in doing business throughout these months
which leads to higher operating costs which is why you see
increased numbers in the accounts payable section and
Advertising section. Starbucks wants to make sure that they
capture every possible customer during this season. Some of
the expenses are the same throughout the year month to month;
these include rent, research and development, and the coffee
bean purchase agreement.
 sam 5.2.1 YEARLY SALES FORECAST

Lehnert
Starbucks has a great overall sales forecast for each month of
the year. Starbucks sees increased sales over the holiday
shopping season which is November and December. Then you
get into the months after Christmas and you see some new
customers come in from the gift cards they have received and
they usually spend more because they are with someone other
than themselves. Starbucks also has great summer and fall
drinks that are seasonal only, which ushers in more people who
don’t regularly go to Starbucks daily.

Sales Forecast
2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Numbers (Billions) $1.2 $0.7 $0.6 $0.4 $0.3 $0.5 $0.8 $0.9 $0.7 $0.6 $1.5 $2.0 $10.2

Sales Forecast
2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Numbers (Billions) $1.3 $0.7 $0.5 $0.5 $0.4 $0.6 $0.8 $0.9 $0.7 $0.6 $1.6 $2.1 $10.
7

Sales Forecast
2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Numbers (Billions) $1.3 $0.7 $0.5 $0.6 $0.5 $0.6 $0.8 $0.9 $0.7 $0.7 $1.6 $2.3 $11.2
 Source: Internal Research June 2010

5.2.2 MONTHLY BREAKDOWN

Starbucks has many expenses to cover and below are a few

important ones according to Starbucks' financials. From
increased sales during the holiday shopping season, you see
that Starbucks also has increased costs, these include accounts
payable for the

sam baing used, and increased

advertising to bring all of those customers in.

Lehnert
merchandise Starbucks has to buy and put on the shelves,
increased amounts of coffee

T
$
Expenses for 2011
(Millions) Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Nov Dec
Long-Term Debt $45.73 $45.73 $45.73 $45.73 $45.73 $45.73 $45.73 $45.73 $45.73
$45.73 $45.73 $45.73

Accounts Payable $17.30 $16.30 $14.10 $12.00 $13.50 $13.70 $14.00 $14.70 $18.00 $23.20 $25.60 $27
Advertising $8.40 $7.50 $6.80 $7.80 $8.10 $9.50 $10.70 $11.00 $11.40 $11.80 $13.70 $16
Research &
Development $0.52 $0.52 $0.52 $0.52 $0.52 $0.52 $0.52 $0.52 $0.52 $0.52 $0.52 $0
Rental/lease
agreements $55.58 $55.58 $55.58 $55.58 $55.58 $55.58 $55.58 $55.58 $55.58 $55.58 $55.58 $55
Interest Payment $0.19 $0.19 $0.19 $0.19 $0.19 $0.19 $0.19 $0.19 $0.19 $0.19 $0.19 $0
Coffee Bean
purchase

agreement $20.11 $20.11 $20.11 $20.11 $20.11 $20.11 $20.11 $20.11 $20.11 $20.11 $20.11 $20
Total Per
Month
(Millions) $147.84 $145.94 $143.04 $141.94 $143.74 $145.34 $146.84 $147.84 $151.54 $157.14 $161.44 $166

Expenses for 2012

(Millions) Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
Long Term Debt $45.70 $45.70 $45.70 $45.70 $45.70 $45.70 $45.70 $45.70 $45.70 $45.70 $45.70 $45
Accounts Payable $18.30 $16.60 $14.40 $12.50 $13.80 $14.30 $14.80 $15.20 $20.20 $24.70 $26.50 $29
Advertising $8.20 $7.30 $6.40 $7.70 $8.00 $9.40 $10.40 $10.90 $11.30 $11.50 $13.40 $15
Research &
Development $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0.54 $0
Rental/lease
agreements $51.67 $51.67 $51.67 $51.67 $51.67 $51.67 $51.67 $51.67 $51.67 $51.67 $51.67 $51

sam
Interest $0.17 $0.17 $0
Payment Coffee
Bean purchase
agreement Total $20.30 $20.30 $20
$0.17 $0.17 $0.17
Per Month
(Millions) $144.87 $142.27 $163
 $0.17 lehnert $0.17
$0.17$0.17 $0.17 $0.17
$

$20.30 $20.30 $20.30 $20.30 $20.30 $20.30 $20.30 $20.30 $20.30

$
$139.17 $138.57 $140.17 $142.07 $143.57 $144.47 $149.87 $154.57 $158.27

(Millions) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Long Term Debt $45.67 $45.67 $45.67 $45.67 $45.67 $45.67 $45.67 $45.67 $45.67 $45.67 $45.67 $45
$
Accounts Payable $17.50 $16.60 $14.60 $12.30 $13.60 $13.90 $14.30 $14.90 $18.50 $24.30 $26.70 $28
Advertising $8.00 $7.20 $6.20 $7.40 $8.10 $9.30 $10.10 $10.80 $11.20 $11.60 $13.50 $15
Research &
Development $0.57 $0.57 $0.57 $0.57 $0.57 $0.57 $0.57 $0.57 $0.57 $0.57 $0.57 $0
Rental/lease
agreements $48.33 $48.33 $48.33 $48.33 $48.33 $48.33 $48.33 $48.33 $48.33 $48.33 $48.33 $48
Interest Payment $0.33 $0.33 $0.33 $0.33 $0.33 $0.33 $0.33 $0.33 $0.33 $0.33 $0.33 $0
Coffee Bean
purchase

agreement $20.49 $20.49 $20.49 $20.49 $20.49 $20.49 $20.49 $20.49 $20.49 $20.49 $20.49 $20
Total Per
Month
(Millions) $140.89 $139.19 $136.19 $135.09 $137.09 $138.59 $139.79 $141.09 $145.09 $151.29 $155.59 $159

T
$
$
$

5.3 BREAK-EVEN ANALYSIS

While taking a look at the break-even analysis Starbucks has an average revenue
forecast of 10.24 billion over the next three years. We take that 10.24 billion and divide it $
by $2.65. $2.65 is the average price of a drink at Starbucks. If we have 10.24 billion in
sales divided
by the average price of $2.65 for a drink, we come out with 3.86 billion cups of coffee
that have been sold yearly over the 3-year forecast. If you take the average variable cost $
of 339.8 cost per drink for Starbucks which is .88 cents per cup of coffee sold. Starbucks

then Sam Lehnert

million and divide that by several cups sold per year 3.86 million you come up with the
takes the average price of a drink subtract .88 cents and you get $1.77 of profit per drink
 sold. So now that we have the average cost per cup sold, we can take the fixed costs of
1459.4 million and divide it by the profit of a drink of $1.77 we get the number of cups of
coffee that have to be sold to break even which is 824.51 million cups sold for $2.65.

824.51cups X $2.65 per drink = Breakeven point T

$
Expenses for 2013
$
$

$
 Source: Internal Research June 2010

5.4 PROFIT ANALYSIS

Starbucks has to sell at least 824.51 million cups of coffee per

year to break even with costs. Each cup sold after the 824.51
millionth is profit for Starbucks. So, to meet the profit standpoint
that Starbucks wants and be able to pay out dividends to the
not profitable. Starbucks has already saved close to 580 million

Sam
dollars with the

Lehnert shareholders

Starbucks has to sell an additional 845 million cups to get to a

profit forecast of 1800 million. Starbucks will succeed if it keeps
cutting costs and closing stores that are
restructuring plan in place in 2009. Starbucks has forecasted
that they will keep cutting costs and improve customer service
while keeping high-quality coffee affordable.

ource: Bing Images

6.0 CONTROLS
The following section outlines the methods by which Starbucks
will recognize and achieve the goals of this marketing plan for
the years 2011 to 2013. We have also defined how and when we
are to obtain these goals. Some obstacles we are to face
include:

• Sustaining repeat business

• Increase product use by existing, loyal customers
• Gaining new buyers and reaching a new market
• Reaction to competitors
• Customer satisfaction
• Keeping up with social media and the latest technology
trends

6.1 IMPLEMENTATION MILESTONES

By outlining and defining different projects and decisions

Starbucks will undergo in the milestones listed below outline
scheduling in the years 2011 to 2013 in both the project

Sam
Lehnert forthcoming

years, we will have a tool to measure our rate of progress and

success. The
promotional department. By setting sales goals and deadlines,
these milestones will help us complete our goals in a timely and
achievable manner. This will also help us determine whether or
not we are on track with our goals and will help us pinpoint
where we can improve. Reflecting on the milestones in a yearly
or quarterly review will help us with decisions as to whether or
not the projects are still beneficial to our overall goal of
improving profit margins and increasing customer satisfaction.
6.1.1 PROJECT MILESTONES

The milestone charts below lay the framework for the project
scheduling for Starbucks within the forthcoming months and
years. Each bar chart shows the schedule for the months within
each upcoming year. Later on, it specifies who is in charge of
each task and which department that responsibility falls under. It
also defines the start dates of each project and the deadlines by
which they are to be completed.
Project Milestones 2011

The horizontal bar chart and table below outline Starbucks

Corporation’s intentions and means of follow-through for the
year 2011. The horizontal graph visually explains the dates in list
form. We feel that this will allow us to plan and evaluate where

Sam
we are

Lehnert's
expectations we have for the upcoming year, while the table
defines the start and end
excelling and lacking. For instance, in 2011, Starbucks began
the year by making strides in opening a new store. We plan on
the opening being the first week of April. At the end of April, we
will start conducting customer response surveys. We will initiate
these again in six months, in November, to see where we are
succeeding and failing, as well as gauge our growth.
 Source: Internal Research Report 2010

Milestone Start Date End Date Budget ($) Department

Site Selection of New 1/1 1/31 1,000 Development
Store
Interviewing and 1/1 1/31 50,000 Development
Hiring
of Contractors and
Other Workers
Necessary to
Construct Store
Construction of New 2/1 3/31 250,000 Development
Store
Hiring and Training of 3/1 3/31 10,000 Human Resources
Staff
New Store Opening 4/1 4/7 10,000 Management
Market Research to 1/1 2/28 25,000 Marketing
Use for Advertising
Campaigns
Updating Website 1/1 1/31 10,000 Marketing
3/1 3/31
5/1 5/31
7/1 7/31
9/1 9/31
11/1 11/30
Customer Response 5/1 5/31 5,000 Marketing
Surveys
Budget and Market 11/1 12/31 5,000 Accounting,
Review & Forecasting Management &
Marketing
Project Milestones 2012

In 2012, we will be predicting new store construction in the

months of more tolerable weather. We will open a new store in
August and see how the area responds. This year, we will focus
on doing market research for advertising campaigns every other
month, with
Also, this year, we will continue the trend of having customer

Sam
response surveys every six

Lehnert updates the

website on alternating other months. We feel that this

partnership will allow us to make successful strides in keeping
up with the industry and the consumer.
months.

Project Milestones 2012

 Source: Internal Research Reports 2010

Milestone Start Date End Date Budget ($) Department

Site Selection of New 5/1 5/31 1,000 Development
Store
Interviewing and 5/1 5/31 50,000 Development
Hiring of Contractors
and
Other Workers
Necessary to
Construct Store
Construction of New 6/1 7/31 250,000 Development
Store
Hiring and Training of 7/1 731 10,000 Human Resources
Staff
New Store Opening 8/1 8/7 10,000 Management
Market Research to 1/1 1/31 25,000 Marketing
Use for Advertising 3/1 3/31
Campaigns 5/1 5/31
7/1 7/31
9/1 9/30
11/1 11/30

Updating Website 2//1 4/1 2/28 10,000 Marketing

6/1 4/30
8/1 6/30
10/1 8/30
12/1 10/31
12/31
Customer Response 1/1 1/31 5,000 Marketing
Surveys 6/1 6/30
12/1 12/31
Budget and Market 11/1 12/31 5,000 Accounting,
Review & Forecasting Management &
Marketing
 Source: Bing Images

Project Milestones 2013

Every year, Starbucks will rely on customer satisfaction surveys

to gauge how well they are faring as a company. This will
especially be helpful in the year 2013 when we will come to the
end of the period of our current marketing plan when we will be
reassessing how to go about our next one for the following three
years. Customer satisfaction surveys months affect the reaction
of the consumer. We will also increase our budget for marketing

Sam
Lehnert will take

place the first week of every month. This will give us time to
review how different
and encourage research constantly throughout the year. Another
big change will be updating the website once a month. This will
cater to our “Web 2.0” target market.

Project Milestones
2013

Source: Internal Research June 2010

Milestone Start Date End Date Budget ($) Department

Site Selection of New 5/1 5/31 2,000 Development
Store 9/1 9/30
 Interviewing and 5/1 5/31 100,000 Development
Hiring of Contractors 9/1 9/30
and
Other Workers
Necessary to
Construct Store
Construction of New 6/1 7/31 500,000 Development
Store 10/1 11/30
Hiring and Training of 7/1 7/1 20,000 Human Resources
Staff 11/1 11/30

New Store Opening 8/1 8/7 20,000 Management

12/1 12/7
Market Research to 1/1 12/31 50,000 Marketing
Use for Advertising
Campaigns
Updating Website 1/1 1/7 25,000 Marketing
2/1 2/7
3/1 3/7
4/1 4/7
5/1 5/7
6/1 6/7
7/1 7/7
8/1 8/7
9/1 9/7
10/1 10/7
11/1 11/7
12/1 12/7
Customer Response 1/1 1/31 5,000 Marketing
Surveys 6/1 6/30
12/1 12/31
Budget and Market 11/1 12/31 5,000 Accounting,
Review & Forecasting Management &
Marketing

6.1.2 PROMOTION MILESTONES

The promotions milestones will show how we use the timing

and placement of the advertising listed in the previous section
and other marketing methods are going to help generate
consumer interest and business. Again, the bar charts will
outline the scheduling for the months within the years 2011 to
2013, and then the tasks will be more clearly great strides over
the next few years to get, and remain, ahead of the curve.

Sam
Lehnert defined and

a budget will be set. By taking a step-by-step initiative like this,

we can take
In an internet-based society, website development is crucial. All
efforts will be going into social media as well. Internal
advertising, which includes posters within the store and other
promotional items, will be used to market to the loyal consumer.
Starbucks originally did not do a lot with TV spots or radio ads,
relying mostly on word of mouth, but recently and in the coming
years we are going to experiment with different marketing tools
in this commercial area.

Source: Bing Images

Promotion Milestones 2011

In 2011, direct marketing will take place at the beginning of every

other month. This will allow us to experiment with different
mailings and judge the response. Social media marketing will
continue throughout the year because this is the target market
that we wish to focus on. Starbucks is a trendsetter in this
market and wishes for it to stay this way.
Internal advertising will also take place year-round. We
believe Starbucks is coming into interest. TV advertising will
start in the summertime as we hope this will attract

Sam
Lehnert more of a

mature phase in the life cycle, so we want to keep our loyal

customers in during the months when people do not crave a
hot beverage.

Promotion Milestones 2011

 Source: Internal Research June 2010

Milestone Start Date End Date Budget ($) Department

Direct Marketing 1/1 3/1 1/1 30,000 Danielle Gore
5/1 3/14 Marketing
7/1 5/14
9/1 7/14
11/1 9/14
11/14
Social Media 1/1 12/31 25,000 Michael Corn
Marketing Marketing
Radio Advertising 2/1 2/28 50,000 Sam Lehnert
4/1 4/30 Marketing
6/1 6/30
8/1 8/31
10/1 10/31
12/1 12/31
Print Advertising 3/1 3/7 50,000 Katie Boggs
5/1 5/7 Marketing
7/1 7/7
9/1 9/7
11/1 11/7

TV Advertising 5/1 8/30 100,000 Brittany Love

Marketing
College Campus 1/1 1/1 5,000 Sam Lehnert
Visits 5/1 5/1 Marketing
 9/1 9/1
12/1 12/1
Billboard Advertising 5/1 8/30 10,000 Michael Corn
Marketing
Internal Advertising 1/1 12/31 25,000 Brittany Love
Marketing

Promotion Milestones 2012

In 2012, we added a few more periods in which to enact our

marketing strategies. We added more billboard space. This was
done during January and February, and also people have
“buyer’s remorse” after Christmas and spend less. Also, we feel

that Sam
Lehnert
November and December. TV ads are also piggybacking off of

this expansion. The reason for the beginning of the year is to

draw customers in even though it is a time of year when

advertising around the holidays will kick up sales.

Promotion Milestones
2012
 Source: Internal Research 2010

Milestone Start Date End Date Budget ($) Department

Direct Marketing 1/1 3/1 1/1 30,000 Danielle Gore
5/1 3/14 Marketing
5/14
7/1 7/14
9/1 9/14
11/1 11/14
Social Media 1/1 12/31 25,000 Michael Corn
Marketing Marketing
Radio Advertising 2/1 2/28 50,000 Sam Lehnert
4/1 4/30 Marketing
6/1 6/30
8/1 8/31
10/1 10/31
12/1 12/31
 Print Advertising 3/1 3/7 50,000 Katie Boggs
5/1 5/7 Marketing
7/1 7/7
9/1 9/7
11/1 11/7

TV Advertising 1/1 2/14 300,000 Brittany Love

5/1 8/30 Marketing
11/1 12/31
College Campus 1/1 1/1 5,000 Sam Lehnert
Visits 5/1 5/1 Marketing
9/1 9/1
12/1 12/1
Billboard Advertising 1/1 5/1 2/14 30,000 Michael Corn
11/1 8/30 Marketing
12/31
Internal Advertising 1/1 12/31 25,000 Brittany Love
Marketing

Promotion Milestones 2013

At the end of our three-year period, we hope to have a good idea

of what is and what is not working for us, marketing-wise.
Hopefully, we will be utilizing our resources correctly. In 2013,
we will double-direct marketing. At this time, we believe we will
know which areas to target and what formatting draws the best
consumer response from mailings. We are still relying on the
“hip” and “chic” perception of the Starbucks brand. We are

simply Sam
Lehnert relying on a
lot of “word of mouth” advertising from our consumers and think
people will still build off of that strong inclination.

Promotion Milestones 2013

Source: Internal Research 2010

Milestone Start Date End Date Budget ($) Department

Direct Marketing 1/1 2/1 1/1 75,000 Danielle Gore
3/1 2/14 Marketing
4/1 3/14
5/1 4/14
6/1 5/14
7/1 6/14
8/1 7/14
9/1 8/14
10/1 9/14
11/1 10/14
12/1 11/14
12/14
Social Media 1/1 12/31 25,000 Michael Corn
Marketing Marketing
 Radio Advertising 2/1 2/28 50,000 Sam Lehnert
4/1 4/30 Marketing
6/1 6/30
8/1 8/31
10/1 10/31
12/1 12/31
Print Advertising 3/1 5/1 3/7 50,000 Katie Boggs
5/7 Marketing
7/1 7/7
9/1 9/7
11/1 11/7

TV Advertising 1/1 2/14 300,000 Brittany Love

5/1 8/30 Marketing
11/1 12/31
College Campus 1/1 1/1 5,000 Sam Lehnert
Visits 5/1 5/1 Marketing
9/1 9/1
12/1 12/1
Billboard Advertising 1/1 5/1 2/14 30,000 Michael Corn
11/1 8/30 Marketing
12/31
Internal Advertising 1/1 12/31 25,000 Brittany Love
Marketing

6.2 MARKETING ORGANIZATION

Starbucks Corporation decided in September 2009 to hire Annie

Young-Scrivner as their global chief marketing officer. Michelle
Gass is also the head of marketing and leads Starbucks’
secondary, Seattle’s Best Coffee. Among the various people
working underneath these two, Starbucks will hire locally in
Grand Rapids to market specifically to the West Michigan Area.
This will happen immediately after entering the area. innovative
mindset. Sam
Lehnert
Hiring will be geared toward marketing and advertising
professionals and students with an

6.3 CONTINGENCY PLANNING

Revenue exceeds projections: If the revenue

generated is higher than we expected, we can put the extra
profit into use for the next fiscal year. We can put more effort into
the marketing arena with the extra income. What we need to do
is figure out what we are doing well and what has triggered this
success so that we can build upon it in the upcoming years. We
could also use this money to refurbish existing locations or build
additional venues. All of the money should be reinvested into the
company in hopes of continued success.

Revenue misses’ projections: If revenue is

considerably less than what we predicted for ourselves, we need
to take a step back and see where we have failed. We may need
to look into the effects of the economy on our profit margins.
Other options may include redefining how we market and for
whom. We may need to see how our products are positioned in
comparison with our competitors. Ultimately, what is necessary
at this stage is a revamping of our product and realizing
adjustments to be made. What we do not need to do is take
away from marketing. Marketing is how will we regain the
consumer’s confidence and rebuild our profit margins.

Social Media plays a lesser role: While Starbucks is

one of the leaders in this newer marketing tactic, we need to
take action to prevent this department from lacking since
financial performance does indeed correlate with engagement in
social media. We will need to make sure that we are engaged in
multiple social media channels. We will need to hire and
dedicate teams specifically for this task. They will need to be
young professionals who will have a good understanding of the
way social media works and the way to market to those who use
social media. We could decide to deal with fewer media
channels to market strongly to a more specific group of people.

A competitor gains the lead in the industry market: If

this should happen, we should take some time to define where
they are gaining their success. We will need to survey current
consumers and lost consumers of our company to see where
our faults lie. If we can define our weaknesses, we can see
where we need to improve. What we also need to do is survey
not only the successes of the competitor but also their
weaknesses we have worked hard to regain their confidence

and loyalty. Sam

Lehnert as well. Their

weakness shall become our strength. What they do wrong, we

will do right. We could take the lead from Domino’s and
apologize for lacking and prove to people that
 Starbucks loses brand power: Starbucks is a
prominent presence in today’s society. Brand power does not go
away overnight, so hopefully we will catch this problem before it
becomes a major problem. To combat this issue, we need to
strive to bring quality to every transaction to keep the customer’s
perception of Starbucks high. We need to be careful if we have
bad publicity especially. Keeping the best PR representatives on
staff will help us in this area. Brand personality and brand equity
go along with this. The problem may lie with not changing the
brand personality with the times. We will need to enforce
advertising with a new personality that will help consumers relate
to the company. For brand equity, we will need to re-associate
the brand identity and meaning in consumers’ minds. Hip
advertising will help us achieve this. We will need to determine
the demographics that we will market to, and we will need to
spend the money that will burn our image back into the minds of
our customers.

Starbucks receives bad publicity: This goes hand-in-

hand with losing brand power. Whether it is via a publicly
recognized lawsuit, unethical practices, or socially irresponsible
decisions on domestic or foreign grounds, Starbucks needs to
tread lightly in these waters. It all goes back to the quality and
prevention of these matters. We need to think globally and have
integrity within our company. We also need people who will work
to build the goodwill and reputation of our company. If we
consistently give back and maintain credibility, we will not be
affected as greatly if we have an incident involving the company.

Industry sales come to a halt: We do not foresee this to

be a likely problem. While sales of certain beverages may be
down, people who like to drink coffee every day will still like to
drink coffee every day- they may just choose a cheaper type. If
this happens, we plan on emphasizing bags of coffee sold for
home use, whether they are sold within Starbucks shops or in a
local grocery store. We could also introduce new, different
products into the market that offer a new approach. For instance,
more frozen beverages or something with a health kick, if that is
how the trends are going.

The Internet side of business plays a lesser role:

Starbucks has an agreement with AT&T for free use of WIFI for
two hours. If someone requests unlimited use of the internet
However, if this causes people to choose other places to use Wi-

Sam
Fi___33 and enjoy coffee, we will

Lehnert provided at

Starbucks, they can purchase a plan with AT&T that allows them
to do so.
need to rethink our strategy. Perhaps offering free, unlimited Wi-
Fi___33 without any catches would be appropriate since we
ultimately need the foot traffic to bring in profit. Also, we could
put our energy into the music and entertainment side of
Starbucks or the baked goods area.

The economy remains in decline: Should this happen,

we should make an effort to cater to our consumers in their time
of need. If we make an effort to keep them now, they will
continue to use us when economic times return to normal. We
can reduce prices or reduce serving sizes. We could also offer a
happy hour- if they come in between a certain period, drinks will
be half off. This will increase foot traffic and hopefully generate
sales for other items that we offer in the store. A dollar or value
menu may even be in the works.
This has worked well for McDonald’s, which is one of our biggest
competitors. Adding value to our product will increase the
product's desirability and worth.
 Consumer tastes change: This answer is simple. We
cannot lose sight of who our consumers are and how to market
to them. We may need to differentiate an existing product to look
new and exciting. We will need to take time to examine trends in
the industry and the country as a whole. As an example, the
zero-calorie health trend recently took off. Adjusting our products
to align with the current fads will keep us hip and on the cutting
edge. Maintaining our loyal customers is a big goal.

Coffee crops are poor: Starbucks prides itself in

offering many different varieties of different coffee beans
prepared in different ways. If a crop of one particular species of
bean has a subpar season, it should not be too difficult to find
another to develop its story and market as a replacement.
Although news travels fast about the dangers of crop failure,
consumers should trust and rely on Starbucks to bring them
acceptable alternatives. have to put liaisons in place in every
country to head the companies in their area. They can

Sam
Lehnert
Starbucks fails internationally: With Starbucks located all over the world, we will
act as a cultural interpreter to give us information as to what
markets well in that particular country and what we are doing
wrong. The last thing we want is to offend someone culturally. If
something should fail in this bracket, we will look to our liaison to
see what we can change. If the fault lies within the liaison, they
will have to be replaced with someone who can better interpret
the market and forecast trends globally.

The music side of Starbucks fails: Coffee shops and

music seem to go hand-in-hand. Should the entertainment side
of Starbucks start to decline, we plan on pushing the literary side
of the coffee shop scene. We could offer book clubs, a used
book exchange, a book of the month, and things of that nature.
Instead of handing out a free music download every week, we
could offer an excerpt of a different book every week with a
discount code for purchasing that book.

Starbucks Card fails: Time and money should be

invested in the Starbucks Card because it encourages repeat
business. If this fails, we may need to offer more bonuses and
perks for using it. The solution may even come from redesigning
the card and remarketing it. We could also negotiate with
another company, like Barnes and Noble, to be able to offer
rewards at their company if consumers open up a card at our
company. We could offer something extra for opening up a card
like a free CD sampler. Both of these solutions will help with our
entertainment division of the company.

Delays in store openings: Things can happen that are

out of the company’s control, such as no real estate,
construction costs, and unreasonable lease or property rates.
This will most certainly affect profit margins and income. It
results in not meeting expected revenues for the year. There is
not a lot you can do about this but to have options. If you have a
backup construction company, you may be able to proceed with
construction as planned. We may need to relocate if the rent is
too high.
 Failures by third parties: Starbucks deals with several
third parties to operate the company. When you deal with
roasting plants, boats that transport goods, coffee mills, and
people who harvest coffee beans, you have the opportunity for
accidents or failures to happen. Even if prices are raised for
things, we need to make our products, like milk, we can
encounter difficulty. Again, alternative options are key here. We
may need to trim the budget and reduce spending on one sector
to cover costs in another sector. Fortunately, difficulties with third
parties are usually isolated incidents. If they

Sam Difficulties in foreign markets:

Lehnert
either the international stores or
This can affect

become reoccurring problems, it is time to find different third

parties to deal with.

imports and exports of goods, such as coffee beans, used to

make our products. It can involve things like customs, tariffs, and
restrictions. It also can involve currency exchange rate
fluctuations. Economic impact from foreign countries plays a big
part in our distribution. Laws and regulations in other countries
may be vastly different than ones in our country. We need
people working for our company who are well-versed in
international business and can forecast economic events to deal
with them accordingly.

Source: Bing Images

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2011-2013Advertising & Marketing Plan