As a newly-appointed CEO of Starbuck's, I would like to represent the innovations for the company in the light of their 4 ps. The 4ps of marketing dates back to 1975 and consists of product, price, people, place and promotion and are collectively referred as the marketing mix as they are the principal foundation of the marketing plan. The main objective of businesses is usually to meet and satisfy the customer’s needs. In order to satisfy these needs, I would like integrate and co-ordinate its package of benefits so as to reflect their characteristics. This proposal aim is to represent how the marketing mix of Starbuck’s innovations, developed by the CEO would affect the implementation of the company’s new marketing strategy and its tactics.
Starbuck's operates in the international coffee and coffeehouse chain industry and has been in existence since 1971. It has been proudly serving the world some of its favorite sorts of coffee. Since its inception, Starbuck's has achieved the level of being recognized as the live history and also created it as a rich history, while implementing the innovations and achieving the point of being associated with the obligatory attribute of business launch, with the indicator of coffee lover. People, who drink the Starbuck's coffee are considered to be the coffee gourmet -those, who understand the best blends of coffee.
In order to support my decision about implementing three innovations, I would like to outline the brief theoretical background, which has been applied for my decision making.
Pricing: the process of the product or service price determining is usually a complicated and not exact task, which involves trial-and-error decision-making and determined by what the consumers perceives as value. The main reason for that is the fact that a product has a psychological connotation for a customer and with it a customer believes are empowered. It is crucial that the benefits of a product are convincing to a customer so as to warrant a certain price. Due to the fact that Starbuck's operates in the global market, its prices should be quoted in the foreign currency. This brings up the foreign exchange issue and the need of the currencies conversion with fluctuating rates.
Product: The product mix is a mean for defining the characteristics of product and service, which meet the needs of customers. This includes both the tangible and intangible elements of a product: tangible elements are the physical attributes that a customer is able to see, touch, feel, taste or smell, while, the intangibles refer to those features, which are psychological - the image offering and customer satisfaction. Also, this covers branding, quality and features that would meet the customer’s needs.
Promotion: The main purpose of advertising is constant for every country and it is to develop the communicative information and create the effective persuasive appeals for the potential clients. In some cases, international companies apply the universal appeals. The marketing research shows that the markets are deemed sufficiently homogeneous, and that, in turn, makes it possible to use standardized advertising for several different countries. It is important to make an emphasis on the fact that there is a need of customizing the media strategy and the features of the message to each country’s environment in the light of its culture, economy, and politics. Furthermore, the additional attention is to be paid to the level of differences in the national identity and according to that issue, the decision whether the special advertising is required or not in the particular country should be made.
The promotions aspect of the marketing mix usually covers all types of marketing communications. Some of the common methods employed are advertising, print and electronic such as TV, radio, in cinema, online, using poster sites and advertising in the press - in newspapers and magazines. Others include promotion and campaigns including sales promotions, point of sale display, merchandising, direct mail, loyalty schemes, door drops, etc. The important skill in marketing communications is the ability of developing a campaign, which uses several of these methods and leads to the most effective results achievement.
Place: This covers the aspect the location of the available products and the channels of the distribution that are defined for providing the customer with particular product or service. It is important to make an emphasis that the location should be included into the strategy, especially for newly-developed products in the market. That is why, the consumers have to be well familiarized with the product and the ways they can buy it. Place, as an element of the marketing mix, is also more than just the physical location of distribution points for products because it encompasses the management of a range of processes, which are involved to delivering the products to the end consumer.
People: This is a new element to the product mix, which plays a vital role in achieving the marketing goals of the business. This element is important to the human capital, because it has the best and well-motivated members (staff) and that enables the firm to reach its target market. Hence, the employees need to be well-versed with the marketing strategy and also they should know the market of the firm’s products and services.
4-Ps in Starbuck's innovations
First of all I would like to implement the following innovations into the strategy of the company: implementing the retro-style design; the tasting rooms and selling wine and beer in the Starbucks.
Product: Starbuck's has overtime managed the creation of a set of offered products which are standardized and have the same taste all over the world. This has led to significant cost savings, but to complement this, adaptation to the particular environment is needed. Adaptation is essential due to the several reasons - such as tastes and preferences of the consumers, laws and customs of the region.
The retro-style design would create the image of the classical brand of Starbuck's - the one, which has a long history and which highly appreciates the tastes and needs of the consumers and which is in process of the constant development and improvement.
The tasting rooms would enable people to make their choice after the comparison analysis of different sorts of coffee. More than that, the staff is to be additionally trained and educated in the history and basic trends of the coffee industry- to tell the degustators about the special features of each sort of coffee. Finally, the clients of Starbuck's would learn more about the culture of enjoying coffee and the steps of feeling the taste of this drink.
The third innovation is selling wine and beer in the Starbuck's, would attract more people. For example, if wife likes coffee and the husband likes beer and one is not the gourmet of coffee - the dilemma of choice “where to go” would be solved for such couple automatically.
Place: Starbuck's currently has several thousands of restaurants in various countries across the world. Starbuck's outlets are evenly spread throughout the cities hence making them more accessible. Starbuck's has continued focusing on the capital outlays managing more effectively, while applying the strategic and prudent expansion. This is achieved through franchising and joint ventures. The innovations, listed above would need additional place - adding one room for degustation and expansion of the area under the beer and vine hall.
Price: Starbuck's has always handled the pricing element of the product mix with care because it affects the sales directly. Despite the cost savings inherent to the standardization, the success of the Company can be attributed to ability of adaptation to the specific environment. This should be applied commonly with its pricing strategy, which is directed more to the localization rather than to globalization trend. In order to implement innovations successfully, Starbuck's should apply the bonus programs- such as discount for the favorite type of coffee after the degustation; storage discount system - providing each client with a discount card and each 10-th cup of coffee should be free of charge etc.
Promotion: The promotion consists of the following advertising issues: sales promotion, direct marketing, personal selling, PR and publicity. By applying these tools into the practice, Starbuck's should be tending to localize both its strategy of marketing communications and the emerging need of managing the wide range of cultural diversities, which occur in the different places of operations. More than that, the need of having effective promotions cannot be ignored. The company should analyze the consumers’ attitudes and tastes towards its product and new products in particular, use the principles of ethnical, religious and moral considerations in different environments.
Besides the idea of promoting Starbuck's as a global brand, the firm should focus on the needs and requirements of the local population in the regions where they are operating. That is why Starbuck's should fit the maxim “brand globally, advertise locally” which is the most acceptable Starbuck's promotional strategy for the nearest future. Another focus of Starbuck's should be directed to the targeting children. For example, implementing the caffeine-free cappuccino for children and adding a specially-designed sweet to such coffee (in shape of doll- for girls and in shape of car - for boys).
People: Starbuck's should use this element of the product mix for maximizing the customers’ service quality. Standardization is also needed in this case because the employees in Starbuck’s should focus on giving a friendly and prompt service to its customers. This would ensure that they meet their customer’s satisfaction and expectations.
As a result of analysis of pros and cons of the three proposed innovations for Starbuck's innovations, it has become being evident that its success is an attribution of the integration of the marketing mix elements that hence can be considered to be the global ones. Thus, it can be concluded that to have an optimum balance of the marketing elements is essential in order satisfy customers. It is therefore true that Starbuck's would achieved global success while applying the principle of global thinking, but local acting, to the whole set of the marketing mix elements.