Starbucks Singapore Coffee | Nanyang Institute of Management 1

Executive Summary:
Starbucks product is a well known which provides high quality coffee & is a world leading
brand contributing its largest chain in coffee industry. In this assignment we will discuss the
marketing strategy being implemented by Starbucks Singapore & will look over Marketing
concept, positioning strategies ,targeting strategies, competitive environment & various others
factors than affects Starbucks Singapore marketing strategy. The three level of products Core,
Actual & Augmented & identification of target segments shows how to be aware of their
competitors & Michal Porter`s five forces contributing how to be aware of the competitors & at
same time some analyzing has been done to help Starbucks to maximize their profit by
understand their customer`s characteristics , needs & wants .
This Assignment also focuses on the importance of customer satisfaction, thus some
recommendation has been given for the improvement to attract more users from the market.
However, This report may have some limitations as this report is only based on Singapore`s
market.










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1. Introduction:
Starbucks coffee first derived in 1971 opened its first store in Seattles Pike Place Public Market
with the aim of offering the world`s best coffee & finest coffee experience to the customers.
Today, Starbucks is having privilege to connect with millions of customer everyday with variety
of products & is the largest coffeehouse company in the world having more than 19,763 retail
stores in over 59 countries. (Starbucks Corporation Fiscal 2012 Annual Q2 Report)
Starbucks has created an upscale image which develops with strong coffee, nice ambience,
comfort to the customers resulting in providing a perfect place where people can relax which
chit-chatting or at the time of doing their work.
Mission statement from the company profile:
Our Mission is to inspire & nurture the human spirit one person, one cup & one
neighborhood at a time & Starbucks Singapore is committed to a role of environmental
leadership in all facets of our business
Vision Statement:
To establish Starbucks as the most recognized & respected brand in the world (Starbucks,
2012)

1.1 Needs, Wants & Demand
The question here arrives is what does market need? & Answer lies in the ability of the
organization to adapt to the changing nature of communicating with the customers. In order to
expand their brand awareness within their target market it`s important to utilize marketing mix
in terms of satisfying & converting needs & wants into demand for its target market.
Product: Starbucks has potential to expand & to introduce different innovative beverages that
helps in satisfying diversify needs & wants; this helps Starbucks to differentiate itself from its
competitors.
Price: Starbucks has attached upscale image to its brand thus their products are priced higher
on the base of value based pricing resulting in emphasizing more towards in-expensive coffee
rather than being perceived as expensive coffee. As per by competitors such as Mc Caf, Dunkin
Donuts Starbucks pricing are quite comparable but its upscale brand ensuring to provide

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finest coffee in competitive pricing is accepted by general users, contributing in satisfying
consumers needs & wants.
Place: Sometimes for consumers Convenience is a key point & Starbucks took this into
consideration hence in Singapore, Starbucks has established their outlets in every
neighborhood to provide convenience to their consumers. Places such as Changi Airport,
Orchard Area, Marine Area, North, South, East, West Area. (Starbucks, 2012)
Promotion: Starbucks uses numerous promotional techniques in order to attract more new
users & making them as their loyal customers. Such as Starbucks Card provides consumers
various benefit on every purchase made through card & it also provides Starbucks free
advertisement & helps in bring new customers. (Starbucks, 2012)
Customers are tired of being involved into traditional advertisement & promotion techniques,
but to keep on innovating & coming up with new ideas on how to reach to these customers is
what need to be maintained.

1.2 Starbucks Product
Product Levels: Core Benefit, Actual Product & Augmented Product (Kotler, Keller & Burton
2009, P342)
Core Benefit: The first level is Core Product. It`s based on the core set of benefits & solutions
derived to customers. In case of Starbucks Singapore, their core product is Hot, Rich and
Delicious Coffee. History has shown conspicuously emphasis on their titled product quality.
Even though their price is more expensive than expected, but is capable for satisfying customer
with it`s rich, aromatic & delicious taste. The benefit of the product is to satisfy the consumer`s
desire of drinking coffee.
Starbucks offers variety of coffee & non- coffee drinks to the consumers by introducing new
non-coffee drinks (summer drinks); Starbucks Singapore is experiencing & enjoying new
segment market. Firm has not only introduced its new range of drinks but also has expanded
its products offering to pastries, smoothies, wraps etc. to keep up with competition to attract
new users & satisfy their needs.
Products Selection:
Coffee: 30+ blend, Single origin premium coffees

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Handcrafted Beverages: Fresh brewed coffee, hot & ice espresso beverages,
Frappuccino coffee & Non coffee blended beverages, Smoothies, Tazo teas
Merchandise: Coffee & Tea- brewing equipments, Mugs & accessories packed goods,
Music, Books & Gift items
Fresh Food: Baked Pastries, Sandwiches, Salads, Oatmeal, Yogurt, Parfaits, Fruit Cups.
Starbucks Singapore ice cream
Ready to Drinks: Starbucks bottled Frappuccino coffee drinks, ice lattes, Starbucks
double shots (Starbucks, 2012)
Actual Product: The next level is Actual Product Level. It is available to consumers in tangible
form, expressed in terms of Product`s brand, packaging & labeling.
Brand: Starbucks Singapore product branding is crucial as its aims to indicate the service
& product which helps in differentiating them from the other major competitors. Brand
enables to build up customer loyalty, to charge value- based pricing, reduce price
comparison & easier cooperation with the mediators. Brands are most commonly used
by companies to provide physical evidence of consistent standards & more particularly
important is that it helps developing an ongoing relationship with the customers.

Packaging: Packaging plays an important role when products are actually being
purchased. It`s the first thing that consumer sees before they made decision to
consume. Packaging is one of their physical evidence. The color of cup is aesthetically in
white & green giving it a pleasant design.

Labeling: Labeling is another important factor which helps Starbucks Singapore to
promote their product & make it recognizable different from their competitors as well
as providing information for buyers & intermediaries.

Quality: Starbucks Singapore is keen to use the finest beans from across the world to
satisfy the taste preference according to different users. Ranging from America, Asia
Pacific, Africa, and Arabic & Multi region blends. These finest beans around the world
comes in different taste & characteristics resulting in providing more choices for the
consumers

Features: Starbucks Singapore has You call it Culture enabling consumers to do any
modification to the drinks

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Augmented Products: The augmented product comprises the totality of features of a product.
It includes the core benefits and any numbers of add-on or premium benefits, which makes
the product more acceptable to certain segments of the markets. The concept of the
augmented product arises from the need to differentiate a generic product from those of its
competitors. Brands cannot exist in the long-run unless consumers can distinguish it from
others. The more distinctive a brand position, with favorable attributes that the
customer considers important, the less likelihood that a customer will accept a substitute.
After-Sale Services: Wireless connections in all retail outlets ; So that consumers can
surf the internet while consuming their drinks

Adding Atmosphere to Outlets: Lighting, Music, Decoration Enhancing the customer
experience (High Customer Satisfaction Zone)

Different tables & chairs: Customer who wants to relax they can choose sofa, Student
or Corporate clients who want to do their work can use chairs & table made for
studying

Delivery & Credit: Starbucks Singapore Card ; After 10 drinks a free drink is rewarded ,
Free drink if you are buying tumble using the Starbucks Singapore Cards

Socket for charging their electronic device


2. Starbucks Singapore Market Orientation
One of the most extra-ordinary famous brand outcasting in the whole world, refelecting the
lifestyle of few generations is definitely Starbucks . Starbucks is the largest chain holding of
coffee retails offering various range of coffees (Hot & Cold), Non Coffee drinks, Sandwiches &
Snacks. It is obvious that the success Starbucks Singapore has gained today would be not
possible if they haven`t chosen up well formulated marketing concept. Starbucks Singapore has
adopted the Societal Marketing Concept with the goal of not only deliver great customer
value but also produce benefits to the communities & environment. This conceptualization is
expressed in Starbucks mission statement which is actually placed in their official website ; To
inspire and nurute human spirit one person, one cup and one neighbourhood at a time &
Starbucks is committed to a role of environmental leadership in all facets of our business
(starbucks, 2012)

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Social Marketing is getting a trendy buzz word, as environmental & ecological problems are on
increase. Few years ago, Starbucks Singapore was critised for wasting resource of using paper
& plastic cups. In today`s time, Starbucks Singapore is the best of environmental friendly
business around the world. Starbucks Singapore has announced its corporate social
responsibilites in annual report for public. They started to use cups from recycled paper or
biodegrable plastic. Social responsibilities is also emphaised in their coffee-bars design, posters
& various promotional campaigns. (Starbucks 2012)
Another core element of the orientation is to create a circle of loyal clients rather than one
time buyers (Profitable customers). The ceo of Starbucks Singapore Howard Schultz explains,
that a person gets more than just coffee when he/she visit Starbucks he gets great people,
first rate music & a comfortable & upbeat meeting place. That`s why people around the
world are willing to visit Starbucks Singapore to get to buy coffee & Starbucks Experience
(Starbucks,2012)
Significantly the next core element is to appear to customer needs. Starbucks Singapore does
everything to achieve it`s customers satisfaction. They were the first who offered free internet
at the stores & started to open store 10 minutes before the actual time to make customer feel
happy & important. (Antiessay, 2012)
(Kotler et al, 2009 , P20)

3. Competitors:
Recently, Starbucks Singapore was not facing the level of competition as it`s experiencing
today. Not too many companies like Starbucks Singapore were in gourmet coffee business.
Thus, Strabucks was successful in created perception on a premium gourmet coffee. But Now,
Starbucks Singapore is facing a lot of competitive issues as a lot of new firms specialized in
coffee business has entered the market. Starbucks Singapore success factor has lead the many
competitors to enter into market.
Some of the Starbucks Singapore biggest competitors in market includes Spenilli`,Tcc, Dunkin
Donuts, McDonald`s Caf. Competitors such as McDonald`s Caf & Dunkin Donuts not only
have extended menu but are also have financial resources & positioning strength which threats
to Starbucks Singapore profitability.McDonald`s markets it`s low price strategy.


Starbucks Singapore Coffee | Nanyang Institute of Management 7

3.1 Porter Five Forces Analysis: It is an important tool for analyzing an organizations industry
structure in strategic processes. It helps the organization to contrast on competitive
environment.

1. Threat of New Entrants: The threat of entry covers: Economies of scale, the high or low
cost of entry, Ease access to distribution channel, Cost advantages. There will always be
a continuous pressure on firm to react & adjust to the new entrants. The easier is for
new organization to enter into the market the more competition is going to be there
within the market.
2. The Power of Buyers: Because of new entrants in the market & competitors like
McDonald`s who entitles to provide finest roast coffee of sensible class for lower price,
buyers can influence to bargain more compared to the bargaining power they had
before.
3. The Power of Suppliers: If in market there are very few suppliers then supplier
bargaining power is comparably high. Although suppliers do have certain limit of power.
Looking on the expansion of outlets it`s safe to say that Starbucks Singapore needs their
suppliers.

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4. Industry Competitors: As the coffee serving industry is rising, Competitors seek
advantage to attract users by reducing prices & bringing in similar products to increase
the share of the market.
5. The Threat of Substitutes: This occurs when product substitution is available in the
market. As there is a lot beverage accessible in market, so the threat of substitute is
high. (Kotler et al, 2009, P316)

4.1 Starbucks Singapore Segmenting:
Demographic Segmentation:

Age: Rely more on 18 40 years
Gender: Male & Female
Income: Depends on Life-Stage (Relatively High)
Occupation: Range from students to professional persons
VALS (Value Attitude life Style):
Innovators: The class of consumers at the top of vals framework. Characterized by high
income & high resource individual for which independence is very important.
2%
40%
49%
6%
3%
Customer Age Group
13-17 18-24 25-40 41-54 55+

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Thinkers: These people have high resource & are motivated by their knowledge. These
are rational decision making consumers and are well informed about their surroundings.
Achievers: They are more likely to purchase a brand which has shown its success over
time.
Experiencers: The group of consumers who have high resources but also need a mode
of self-expressions. Mostly characterized by young adults, consists of people who want
to experience being different. (Marketing91, 2012)

4.2 Starbucks Singapore Targeting & Positioning:
One of the marketing strategies of Starbucks Singapore is to focus on Broad Product
Differentiation; as depending on competence & Innovation, Starbucks Singapore has
establishes its competitive advantage by broadly differentiating its coffee & coffee related
products from its competitors. Starbucks Singapore combines its merchandising strategy with
its marketing strategy to create a distinctive broad image for its products.
One of the key successes of Starbucks Singapore has been its successful projection of its stores
venue for socializing contributes itself as a Third Home A place where consumer can spend
time other than being at home or office & it made possible when each store was designed in
terms of providing comfort level to the consumers. Starbucks Singapore operates coffee shop
to hang out & relax for the one who deserves a coffee break. A wide range of service includes
such as membership, programs, delivering quality service. The product innovation & store
ambiance that Starbucks Singapore has implemented to its outlets is to enhance & complement
the consumer coffee drinking experience. Starbucks Singapore strategy is to position itself as
an upscale brand differentiate its offering not just as coffee product but also providing a unique
Starbucks experience to the users & this experience has been the company selling point.
(Citeman Network, 2012)




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Perceptual Map

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Conclusion:
Success of any company is lies on proper implementation & execution of strategic marketing
plan. A company may have an ideal product, but without proper positioning, target market &
marketing plan any company would not be successful in the market. Whereby, Starbucks
Singapore has successfully able to carry out its activity towards the commercial success.
Starbucks Singapore has been able to convince customers that their stores provide more than a
cup of coffee, which is Starbucks Experience. The company is able to translate Customer
experience of its product into a high profitable business. Still however, there`s always a room
for the improvement in order to be more innovative & productive so that product can be
differentiated from its competitors. Thus, in Section below I have provided some
recommendations.














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Recommendation:
1. Ability to Increase connection with Consumers: The one way through which Starbucks
Singapore is differentiating its product is through emotional connection developed with
consumers. This formal relationship has been formed by creating store atmosphere that fits
the consumers & by giving proper training to employees to develop & keep on maintaining
consistent personal connection with the consumers. In today`s time, what customers want
is; More personnel interaction.

2. Continually improving the coffee: Starbucks Singapore has improvised a lot into their
differentiation products & I recommend keep on doing that consistently. As well know
Starbucks Singapore has been known as a leading brand in this fast casual industry just for
its products which is coffee. Looking at increased competition Starbucks Singapore is
struggling out in today`s time it`s important for the company to look deeply into their
quality level of coffee, analyzing their brewing system & ability to bring out distinctive
flavors of the world to the consumer.


3. Being more environmental Friendly: As in today`s time people are getting more educated,
they are quite concern relating to environmental issues. As we know Starbucks Singapore
has made a lot of efforts enhance their image as environmental friendly but I do believe
there would be still room to develop more thus ending up in resulting as differentiating
their brand.

4. Improvise more on Promotional Activities: Its important for Starbucks Singapore to
improvise on aggressive promotion; as even though if it launches any new products, many
of the customers are unaware of them & only gets to discover it when they patronize the
outlet. As looking at current promotion techniques it`s only looking over word-to-word
communication, Social sites & on selected magazines.

Proposal:
Starbucks Singapore can introduce hang- on promotions in mrt & bus.
Increase social media communication as it`s free of cost & it can helps in
communicating Starbucks products to mass market ; which may attracts new users
as well.


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References:
Antiessay (2012) Starbucks Singapore Anti Essay Starbucks.
http://www.antiessays.com/free-essays/28452.html [accessed 1 Aug 2012]

Kotler, P., Adam, S., Brown, L. & Armstrong, G. (2009). Principles of Marketing. Australia:
Pearson Education Australia

Kotler, P., Adam, S., Brown, L. & Armstrong, G. (2009). Principles of Marketing. Australia:
Pearson Education Australia

Kotler,P., Burton S.& Keller k. (2009). Marketing Management. Australia: Pearson
Education Australia

Marketing91 (2012)'Value Attitude & Lifestyle: Framework' VALS.
http://www.marketing91.com/vals-values-attitude-lifestyle/[accessed 05 august 2012]

Rama, R. (2012) The Starbucks Experience Citeman Network.
http://www.citeman.com/9301-the-starbucks-experience.html [accessed 1 Aug 2012]


Starbucks (2102) Starbucks detailed Strategy Starbucks Newsroom.
http://news.starbucks.com/article_display.cfm?article_id=184 [accessed on 04 August
2012]

Starbucks (2012) Environmental Stewardship Responsibility values goals & Progress.
http://www.starbucks.com/responsibility/environment [accessed on 04 August 2012]

Starbucks (2012)' Starbucks Corporation Fiscal 2012 Annual Q2 Report 2012 Fiscal
Release. http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-news&nyo=0
[accessed 31 July 2012]

Starbucks (2012) ' our company: Starbucks Company Profile' about us.
http://www.starbucks.com/about-us/company-information [accessed 31 July 2012]


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Starbucks (2012) Our Stores Store Locator. http://www.starbucks.com.sg/store-
locator.html [accessed 31 July 2012]

Starbucks (2012) Starbucks Card. http://card.starbucks.com.sg/sbux/ [accessed 31 July
2012]

Starbucks (2012) ' our company: Starbucks Company Profile' about us.
http://www.starbucks.com/about-us/company-information [accessed 31 July 2012]

Starbucks (2012) Being a Responsible Company Responsibility.
http://www.starbucks.com/responsibility [accessed 31 July 2012]