Competition for Starbucks

Identify and analyse marketing environmental factors that impact marketing activities of Starbucks.

Starbucks is a very famous beverage chain nationwide. It is a known brand and everyone is familiar with the same. It has introduced many innovative beverages till the date. It provides various types of products with high quality that has been created a very big loyal customer base. People are very passionate about the products of Starbucks. It is growing in a faster pace as the workforce of this organization is very dedicated and work with full efficiency (Zia & Kumar, 2016).

Earlier, people were more addicted to the soft drinks brand like Coca- Cola and Pepsi but both the choices and perception of people has been changed with the time as now they are more health conscious. Many other brands are launched in the market that has become a choice of consumers die to health perspective (Haskova, 2015). Now people prefer juices, sports drink, energy drinks instead of carbonated drinks. Starbucks has focused upon new innovative drinks that do not have any negative impact on health. It tries to understand the requirement of the customer and fulfill by providing better products. The marketing strategy should be health oriented because in future also, people will surely go for healthier options.

There are many big competitors of Starbucks as many big companies have been entered in the beverage market from past some years. The major competitors are the soft drink providers- Coca – Cola and Pepsi. Both the companies are leading with approx. 44% of the total beverage market. There are some more competitors like McDonalds and CCD, as they provide somewhat similar beverages and they charge comparatively low price for them. According to the economic scenario, people are spending higher amounts on beverages and competitors are focused on creating quality products as cheaper prices. Bubble Tea is a very uncommon product and Starbucks can convert this product in a good opportunity in grabbing higher market share.

If we focused upon the trend of the market, Coffee beverages are always high in demand and inelastic in the industry. The regular consumer of coffee products do not impact by the rise or decrease in the prices of the products, they want to consume in every situation. Due to that, we can consider Bubble Tea only a substitute of caffeine beverages. It is a suitable drink for kids as well as young generation who are ready to ty new things.

Importance of health-oriented beverages

Political environment- Political environmental factors create an impact on Starbucks also as on any other organization. The Bioterrorism Act has been passed by congress after the terrorist attack of September, 2011. According to this Act, in United States, all the domestic as well as foreign manufacturers that manufactures or process packaged food must have a registration with FDA. This Act will help as the FDA will immediately react to any attach on the US food supply. In case of any emergency or outbreak, FDA will have all the information to find out the cause and will contact the affected areas (Lefebvre, 2004).

Social environment- Social environment also creates an impact on Starbucks. Coffee is considered as a thing related to culture and a beverage that helps people in relaxation. Consumption of coffee has been started in 16^th century in Europe and was served in social gatherings too. People consider coffee just not a drink, but a drink that helps in relaxing as well as in celebration. Bubble Tea can also become a beverage for celebration as it is a suitable drink for the people belongs to different age groups.

Technological environment- Technological environment includes the way or technologies that help in the production of coffee. The method of producing coffee is still the same but technology to make it in a faster and easier way has been introduced. Now, people are using new techniques for brewing coffee and machines that can make instant coffee just by using some buttons. Technique or method for creating Bubble tea is also easy as the ingredients for the same are normal.

It is necessary to do an analysis of target market as well as positioning in the segmentation part. The target market of Bubble Tea is the whole population of New Zealand that includes kids, young, old, rich as well as poor people. There should be very attractive promotional tools that can create an excitement for all the people. The selection of media will be television, social media, hoardings, radio and public relations. Television can be the most beneficial mode of promotion as it can reach the advertisement of Bubble Tea in 90% of homes in New Zealand, but it is an expensive way of promotion. Starbucks has a good budget for its advertisement and promotional activities. Social media can also be considered as one of the most effective way to promote Bubble Tea as most of the Young generation is very much active on social media. Students in New Zealand are also a very heavy radio user and Starbucks can use radio advertisement to explain the taste of Bubble coffee (Amuah, 2013). If we focus on magazines, a very specific class of people in New Zealand is magazine reader but we want to promote the Bubble coffee for each and every type of population so magazines can help too. Starbucks can design the coffee glasses in an attractive manner so that people become curious about the product just by watching the advertisement or look at the attractive coffee glass (Jiménez-Marín, 2018).

Impact of Political, Social and Technological Environments

There are many objectives of the promotional activities of Bubble Tea. It is important to create awareness about the product to every age group and different class of people. It is necessary to use marketing strategies in order to grab a big market share and beat the top beverage provider in the competition (Yanez, 2012).  Bubble Tea should fulfill the expectation of the customers. It is a very new product for Starbucks so it is important to advertise it in an efficient way and give a chance to the customers to try it and develop the taste. Bubble tea is a good beverage for party with friends or for some serious business discussions. Families can also have it after dinner (TUTEN, 2018).

It is necessary to run a successful market campaign for the launch of Bubble tea as it is a whole new beverage for the market. Consumers will hesitate to try even once because they never ever heard about such beverage. There should be perfect strategies related to product, price, place and promotion related decisions. It is known as marketing mix (Doyle, 2013).

Product decisions plays a very vital role in the marketing strategies related to any product and the two important factors that needs to be considered are brand personality and product modification. Brand personality plays a role in creating an image of the brand in front of target market segment. There are different characteristics of the brands like cool, funky, serious, healthy etc.  So, the brand image for Bubble Tea would be tasty and cool (MacInnis, Park & Priester, 2009).  In terms of product modification, Bubble tea should have a very attractive packaging in terms of the design of the glass and straw. Creative and attractive packaging attracts customers in a faster way.

Pricing decision of Bubble Tea should be decided according to the affordability of each class of people because the target market includes upper as well as middle class of people. Pricing matters a lot in the sale of the product because it is important for people to consider it worth the money they are spending (Mani, 2010).  It creates an impact on the product positioning. According to the financial crunch that started in 2007, Starbucks has made high losses in all the stores across the globe. So, it created a strategy related to lower the prices of the products. So, it is a very crucial step to set the price of the products and pricing strategy should be created very carefully (Winer & Dhar, 2014). There are three aspects that need to be considered while setting the price of the product- Demand of the product, product life cycle and its substitutes. The demand of such products depends upon the disposable income of the consumers and the substitutes available in the market. It has been considered that if the price of a product is higher so as the value is also higher. Product life cycle is also important as Starbucks can charge a high price for the new product with high profit margins. There are different competitors in the market also that can impact. In New Zealand, Starbucks has to create an analysis of different price determinants for the pricing of Bubble Tea (Pulido Polo, 2018). The current demand of Bubble tea is New Zealand is quite higher and there are around 20 Bubble Tea providers in Auckland (Weinstein, 2013).  These shops are already very famous and have so many regular consumers. Bubble Tea is liked by group of friends as well as mature adults.  Starbucks can initially set higher prices for Bubble Tea as it is a new product for Starbucks. But this strategy will not work in the long term because there are so many Bubble Tea providers that are providing on lower prices than Starbucks (Lin, 2013). Customers opt for that option instead of choosing Starbucks. The cost of making Bubble Tea is very low, so there can be more competitors in future as they can have good profit margin on this particular beverage. So, the price of Bubble Tea should not be set very high. The approximate price of it should be $5.50 to compete with other competitors (“THE MARKETING MIX: A REVIEW”, 2014).

Target market analysis

Bubble Tea should be available in all the Starbucks stores of New Zealand. Starbucks has so many outlets in different cities of New Zealand so it is very easy to make the product reach to the people belong to different cities (Guler, 2018).

Promotion activities are important for every new product launch in order to make people familiar with the product (Jiménez-Marín, 2018). The major objective is to create awareness about Bubble Tea in the whole country for people belong to different class and age group. It has an objective to grab a high market share and to become one of the favorite beverages for the consumers. It is necessary to face competition with other beverage providers too. It is important to explain the product to consumers to create an eagerness and excitement to try it (“Social media, content marketing and engagement strategies in B2B”, 2018).

All the elements of marketing mix are integrated for Bubble tea as there is not a specific target market segment so promotional activities has been decided in such a manner so that it can reach to every type of customers whether it is student or parents or kids. The pricing decisions have been set so that it can be affordable for each class of people. The target of Starbucks is to make Bubble Tea reach to the whole population of New Zealand and they created there place strategies accordingly. They will introduce the product from each outlet of Starbucks in New Zealand (Baines, 2011).

As Starbucks is launching a very new product Bubble Tea, the coordination and control will be very simple. The whole marketing process can be easily controlled by Starbucks as this is not the first time they are launching any product (Mohout, 2015). They have launched many products till the date so they know how to deal with marketing strategies in a well manner.

References

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Doyle, P.(2013). Value-based marketing. Hoboken, N.J.: Wiley

Guler, A. (2018). Inferring the Economics of Store Density from Closures: The Starbucks Case.Marketing Science. doi: 10.1287/mksc.2017.1078

Haskova, K. (2015). Starbucks Marketing Analysis. CRIS – Bulletin Of The Centre For Research And nterdisciplinary Study, 2015(1), 11-29. doi: 10.1515/cris-2015-0002

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Lefebvre, R. (2004). Social Marketing: Principles and PracticeDonovanR. & HenleyN

MacInnis, D., Park, C., & Priester, J. (2009). Handbook of brand relationships. Armonk, N.Y.: M.E.Sharpe.

Mani, C. (2010). Environmental analysis. Jaipur: Oxford Book Co.

Mohout, O. (2015). Lean pricing. Brugge: Die Keure Professional Publishing.

Pulido Polo, M. (2018). Acts or events? A perspective from the marketing mix. IROCAMnternational Review Of Communication And Marketing Mix, (1), 56-66. doi:10.12795/irocamm.2018.i1.0

TUTEN, T. (2018). SOCIAL MEDIA MARKETING. [S.l.]: SAGE PUBLICATIONS

Weinstein, A. (2013). Handbook of Market Segmentation. Hoboken: Taylor and Francis.

Winer, R., & Dhar, R. (2014). Marketing management. Harlow, Essex: PearsonYanez, M. (2012). Types of Advertising. Delhi: White Word Publications.

Zia, M., & Kumar, N. (2016). A Three Dimensional Vertical Differentiation Model: Implications for     Segmentation, Targeting and Positioning. SSRN Electronic Journal. doi: 10.2139/ssrn.2758430