9-1 Final Project Marketing Analysis

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Jan 9, 2024

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Southern New Hampshire University MKT-618: Marketing Analytics Professor Jefferson Haddox 9-1 Final Project: Marketing Analysis Elizabeth A. Hauck Executive Summary: Starbucks is an unparalleled global phenomenon and an undisputed leader in the coffeeshop chain industry. From its inception, the brand's sole purpose has been to provide customers with the finest premium coffee. Starbucks continues to experience an upward trajectory in earnings per share in the short term, and its long-term growth prospects remain robust. However, with the ever-increasing market, the brand is likely to face a surge in competition. To maintain its supremacy in this space, Starbucks must concentrate on expanding internationally and introducing more diverse products. I. Company Overview: a. Historical Overview: Starbucks was established in 1971 by Gordon Bowker, Jerry Baldwin, and Zev Siegl. The first shop opened for business in the Historic Pike Place Market in Seattle, Washington and originally sold high-quality coffee beans and equipment. Starbucks had been in business for over a decade when Howard Schultz, the head of marketing, determined that there was more of a demand for selling drinks than selling coffee beans and equipment. He tried

to persuade the three business owners of his intuitions; however, he was unable to get their support. In 1986, Schultz made the decision to leave the company and open up his own coffee shop chain called II Giornale. He was very successful and quickly expanded into multiple cities. The following year, Gordon Bowker, Jerry Baldwin, and Zev Siegl sold the store, and it was acquired by Schultz. He combined all of his operations under the Starbucks name and the café business model with additional sales of coffee beans, equipment, and other related items in Starbucks stores. In just (4) four years, Starbucks grew from (20) twenty stores to more than (100) one-hundred and in 1996 began opening international stores. By the end of the decade, Starbucks became the largest coffeehouse chain in the world with over 2,500 locations in more than a dozen countries. Today, Starbucks is headquartered in Seattle, Washington and specializes in premium roasted coffee, specialty drinks, and delicious food items. It is considered a global phenomenon and operates in over (84) eighty-four countries. Starbucks mission statement is, “with every cup, with every conversation, with every community, we nurture the limitless of possibilities of human connection.” The brand ensures that every store is aligned with their values by providing the customer with quality beverages and a relaxing café experience. The values include fostering a positive brand culture that welcomes everyone and brings a sense of belonging for all, discovering new and innovative ways to grow the brand challenging their current state and always acting with courage. Starbuck believes to be present in today’s world

they must form connections with respect, dignity, transparency, while delivering the best possible performance and being accountable for the results (Starbucks, 2023). In 2022, Starbucks had over 35,000 stores worldwide with more international stores than those located in the company’s home nation of the United States (Statista, 2022). The stores offer a variety of teas, coffees, specialty drinks, pastries, and other food items. As well as sells packaged bean/ground coffee, merchandise, and equipment. The brand also licenses their trademarks through channels including but not limited to licensed stores, grocery, and food service accounts. Tazo, Teavana, Ethos, Seattle’s Best Coffee, Starbucks Refreshers, and Starbucks Doubleshot are just a few of the product names that Starbucks markets under. b. Research Tools and Methods: It is imperative that Starbucks performs market research prior to the development and marketing of “Serenity,” the infused green tea. The (2) two commonly used forms of market research are primary and secondary research. Primary research is defined as a gathering of credible data that has not been collected before. Methods of collection include but are not limited to surveys, interviews, and observations. The benefits of primary research is that the data is unique (and nobody else will have it), can be obtained quickly, and is up to date. It is answers a specific question rather than rather than relying on data that was collected for different purposes.

Secondary research is conducting research utilizing data that is already in existence. This includes but is not limited to case studies, journal articles, and newspaper editorial/opinion pieces. The benefits of secondary research is that it is easier and cheaper to obtain depending on the type of source being utilized. It can help answer certain questions, test hypothesis, and formulate appropriate research designs. Market research will help Starbucks with identifying the tea’s target market and determine their opinion/thoughts on the product idea. This can be accomplished by looking into similar products that are available on the market to ensure that the brand is targeting the proper market and making any necessary adjustments to be better aligned. Starbucks can also send out a variety of surveys via CRM to ensure that infused tea will be favorable to the current customer base. The secondary research will be a mixture of qualitative and quantitative data that will help with meaningful conclusions. A specific tool that will be utilized will be the internet through search engines, professional reports, and search engines. II. Brand Position, Presence, & Exposure: a. Market Landscape: Starbucks has a notable global footprint with 35,711 stores across the world. In 2022, there were more international stores (19,838) than in Starbucks’ home market of the United States (15,873) (Statista, 2023). The current market size for the coffee shop industry is $165.7 billion USD, which

Starbucks accounts for more than 33% of the total industry revenue. The company’s global portfolio is anticipated to grow by 7% annually from fiscal years 2023 to 2025, up from the last projection of 6% (Starbucks Stories & News, 2022). Starbucks aims to reach 45,000 stores by the end of 2025 and will likely be on track to reach 55,000 stores by 2030. b. Financial Standing: Starbucks’ financials have remained consistent over the last (5) five- year period. For the 2023 fiscal year, Starbucks’ annual revenue reached $36 billion USD, which represented a 12% increase year-over-year (YOY). In 2022, the annual revenue was $32.35 billion USD, a 10.98% increase YOY. In 2021, the annual revenue was $29.061 billion USD, which was a 11.28% decrease YOY. In 2019, the annual revenue reached $26.52 billion USD. The significant decline in 2020 was due to the company losing out in roughly $5.1 billion USD in sales due to the COVID-19 Pandemic. Numerous markets experienced closures, modified operations, reduced hours, and reduced customer traffic. However, Starbucks quickly came back and has remained stable since. Starbucks breaks their sales into (3) three categories: beverages, food, and other. For the last (3) three years over 70% of total sales came from beverages, roughly 20-22% came from food, and the remaining came from other. Stock price reflects the company’s value and what the public entities are willing to pay for a part of the company. Stock prices are constantly

changing by supply and demand. If people want to purchase a stock (the demand) than to sell it (the supply), then the prices increases. Starbucks all- time high stock closing price was in July 2021 reaching $119.62. The most recent closing stock price was $105.57, with the lowest price in the 52-week being $89.21 and the highest price being $115.48. The average stock price over the last (52) weeks was $101.06. Stock prices have remained mostly stable since 2019 with significant increases and minimum dips. c. Potential Market: “Serenity,” the infused green tea has the opportunity to add immense value to Starbucks’ portfolio. However, it must be determined who the true audience is for the beverage by clearly defining the customer segments. This is an imperative part of the launch, as it will help promote the product to the right customer base and ensure resources are properly applied and not wasted by too broad of a reach. Starbucks will focus on the (4) four primary market segmentations: demographic, psychographic, behavioral, and geographic.  Demographic: o 53% female / 47% male ratio. o Millennial (Core audience) / Generation Z (Booming Audience) – age group: (20) twenty years old to (50) fifty years old. o Middle-class to upper-middle class. o Have or be accessible to a disposable income.

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