Contemporary Marketing

Assignment No. 1

STARBUCKS
An Analysis of the Micro and Macro Environments

EMBA – SZABIST Islamabad

M Ishaq Baig

Abdus Samad
 1 TABLE OF CONTENTS

2 Introduction ............................................................................................................................. 3

3 Starbucks ................................................................................................................................. 3

4 The Marketing Environment ................................................................................................... 3

5 The Micro Environment .......................................................................................................... 3

5.1 Company .......................................................................................................................... 4

5.2 Suppliers ........................................................................................................................... 4

5.3 Marketing Intermediaries ................................................................................................. 4

5.4 Competitors ...................................................................................................................... 5

5.5 Publics .............................................................................................................................. 5

5.6 Customers ......................................................................................................................... 5

6 The Macro Environment .......................................................................................................... 5

6.1 Demographics................................................................................................................... 6

6.2 Economy........................................................................................................................... 6

6.3 Nature ............................................................................................................................... 6

6.4 Technology ....................................................................................................................... 7

6.5 Politics .............................................................................................................................. 7

6.6 Culture .............................................................................................................................. 7

7 Conclusion ............................................................................................................................... 7
2 INTRODUCTION

This short paper discusses the marketing environment that surrounds the local chain of retail
outlets that go by the name ‘STARBUCKS. Each element of the micro, and macro environment,
that collectively form the marketing environment will be sequentially considered, and their
impact of the store will be analyzed.

3 STARBUCKS

Starbucks Company has been referred to as a global coffee enterprise as well as a coffee house
chain located in Seattle, Washington. Starbucks have been nominated as one of the largest coffee
houses all over the globe. It has approximately 21,000 + stores located in 61 countries all over
the world. Some of the relevant figures regarding the same are 14,000 stores in United States,

1,300 in Canada, 1,000 in Japan, 500 in South Korea, 800 in United Kingdom, 750 in China,
300 in Taiwan, 350 in Mexico & 170 in Thailand.

4 THE MARKETING ENVIRONMENT

Marketing Environment is the combination of external and internal factors and forces which
affect the company's ability to establish a relationship and serve its customers. As mentioned
earlier, that the subject of this study would be the external environment which comprises of the
micro and macro environment factors.

5 THE MICRO ENVIRONMENT

The micro environment comprises the following factors:

i. Company
ii. Suppliers
iii. Marketing Intermediaries
iv. Competitors
v. Publics
 vi. Customers

We will now go over the effects of each of these factors on ‘STARBUCKS’, as it is popularly
known.

5.1 COMPANY
Without a close knit communication channel between departments, an organization rarely
survives. We make sure everything we do honors that connection – from our commitment to the
highest quality coffee in the world, to the way we engage with our customers and communities to
do business responsibly The company's most recent efforts to bring in new customers involves
not bringing them in at all. Instead, Starbucks will bring the coffee, eats or anything else on its
menu to you through its expanding delivery service. Starbucks has begun delivering in major
U.S. cities through a partnership with Uber Eats and hopes to expand the service in the years
ahead. The company is also expanding its drive-thru options so commuters can pick up a brew
without the inconvenience of finding a place to park

5.2 SUPPLIERS
Suppliers are the people who make the product available in the market. They arrange all the
resources at the right place and on the right time that are useful for the manufacturing.
Sometimes, they work as a face of company for the customer

5.3 MARKETING INTERMEDIARIES

When it comes to marketing intermediaries, like all organizations, STARBUCKS is also
dependent upon banks for financial transactions and services. Since the processes and procedures
of banks are very well defined, the company operations are planned out, and managed
accordingly.

Services of marketing agencies has been utilized in the past, not in a way that these are now a
dependency for the company in anyway. The company believes strongly in the marketing
through positive ‘word of mouth’ philosophy, and this has worked for them so far.
5.4 COMPETITORS
An ever watchful eye is required on the competition to stay ahead in the market. There are the
numbers of competitor such as Costa coffee and Coffee Nero present in the market and offering
the same product at a very low price to penetrate the market. As it is known that Starbuck has
captured the large area of market in this industry so the competitor always shows interest to
know the strategy behind the introduction of the new product by Starbuck. So Starbuck has to
control on the information and strategy they are using.

5.5 PUBLICS
Media, social or electronic, is of course the greatest dependence of any organization. Thus far,
Starbucks has only received very positive reviews. A watchful eye is kept on the media, so that
concerns over its operations may be addressed immediately.

Apart from the media, local community organizations have also remained positive . The product
being offered is unique, and is acceptable to all, with hardly any complaints.

5.6 CUSTOMERS
Customer is the person who buys the product with the exchange of money. What a customer
wants from any organisation is the satisfaction of their needs. If a customer finds that his or her
need is fulfilled by this organisation then they hardly move to the other organisation. It should
always take care to find the exact need of the customer.

6 THE MACRO ENVIRONMENT

The macro environment comprises the following factors:

i. Demographics
ii. Economy
iii. Nature
iv. Technology
v. Politics
vi. Culture
We will now go over the effects of each of these factors on ‘The Dollar Store’, as it is popularly
known.

6.1 DEMOGRAPHICS
Demographics allow businesses to create categories of the total market population. They are then
able to target the category, or segment of the population that their product serves, and provides
value to.

At Starbucks, the demographic segmentation's main group is between 25 and 40 years of age
with high incomes, the second target group is 18 to 24 year of age and belongs to richer families.
In general, the customers belong to the Generation Y born between 1977 and 2000; this is where
most profit is made as claimed by Fromm (2014). When targeting, Starbucks is situated between
mass marketing and segment marketing; they are targeting a broader public; however, there are
some criteria that the customers should have, such as higher incomes or a younger age

6.2 ECONOMY
Customers’ economic conditions are not same in the different countries. The distribution in
income also impacts on the pricing policies of the company and also affects the market
segmentation and decision. Here I am taking the example of one factor of economic factor that is
employment rate. If the employment rate of the country decreases, in result Starbuck has to
decrease the price of the product because of the high number of the people who have lost their
job. Hence, Starbuck might change its decision on pricing policies for same product in the
different countries by keeping the economic conditions of the country in the mind.

6.3 NATURE
Apart from natural disasters, organizations do manage to work around the natural environments
of their area of operations, and in the cases of successful businesses generally, manage to make it
work to their benefit. As a company that relies on agricultural products, we have long been aware
that the planet is our most important business partner.Our comprehensive approach to reducing
our environmental impact means looking at all aspects of our business, how
they intersect and how we can integrate new solutions to create meaningful and sustained change

6.4 TECHNOLOGY
Advancement in technology outdates the existing and the old.Starbucks is well aware to extend
and improve its Internet facilities and also tools to target customers, analyse data, and deliver
new features to the market in the shortest time. he technology like as coffee making machines
and the computers system development that Starbucks use to operate their till registers will
enable their staff to work more quickly and efficiently. Starbucks has huge budget and have
allocated the resources to have accurate Research and Development data.

6.5 POLITICS
Thus far, the store has managed to remain unaffected by the political situation of the region and
the country. Starbucks should carefully investigate the political stability of any country before
they want to plan for expand to. It can affect in taxation and legislation when the government
change. The global economy must be carried into attention as it can affect Starbucks’ sales and
markets. A decrease in licensing and permit costs in those countries producing the coffee bean
for Starbucks will lower the production costs for farmers.

6.6 CULTURE
In terms of business, the social culture of the region, due to the economy, Starbucks refers to the
social factor. Lately, Starbucks have been reported with increased instances of product recalls. In
the year 2011, the department of Agriculture Food Safety inspected Listeria bacteria in the
chicken to be used at Starbucks. In order to be on the safer side, the Department of Food &
Safety recalled all the Chicken Chipotle Wraps and Chicken Hummus boxed meals

7 CONCLUSION

In conclusion, Starbucks has strategic capabilities which can be seen in terms of the following
i.e. location, number of stores, market leadership and supply chain operations. It shall be taken
into consideration that, Starbucks has been enjoying highest market share in case of the coffee
market. Starbucks have been setting trends by serving its customers with different variants of
coffee such as Frappuccino (specialty for Starbucks), etc

The factors and forces that make-up the micro and macro environments surrounding the
business, are being considered, at each step of the way, and are managed in the most beneficial
way possible.