Introduction to Marketing

Dr. Eve Rapp

December 4th, 2013

Starbucks Coffee Co.

Catherine Andre Juste
Whitney Campbell
Kelly Presley

Mktg 220
Dr. Eve Rapp
Fall 2013

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
Introduction
Starbucks is one of the most recognizable brands in the market; they have continued fast thriving
growth since 1987. Since then Starbucks has added 2 stores on average daily and the highest
concentration of store locations within 25 miles of each other is 560, Business Insider reveals in
an article about how successful the continuous growth is for Starbucks. Although Starbucks
seems to be everywhere you turn, their focus is not solely on growth but also community which
is reflected in their mission statement; To inspire and nurture the human spirit one person, one
cup and one neighborhood at a time. Starbucks mission statement reflects that they wish to be an
inspiration to the community through spreading love and nurture. This is not just talk, this
company makes moves that reflect the statement and if you look on their website they have
pages and sections that dive deep into the goals they have, focusing in on the environment,
community, ethical sourcing, and global responsibility.
Executive Summary
When looking into Starbucks image and what goals they set as a company we wanted to
introduce a new product that would set them apart from other coffee companies as well as
reestablish what community role they have and continue to play. Starbucks has a distinct value
for being a responsible company, which is stated on their website, targeted in four divisions:
Community, Ethical Sourcing, Environment, and overall Global Responsibility. The new product
had to reflect these goal so together as a marketing team we decided to introduce clothing
apparel as the new product. This will be launched as a campaign called Pour Your Heart Into It.
This campaign will be a unisex clothing line including ball caps, t-shirts, and hoodies. Starbucks
will partner up with American Apparel clothing company so that the products are american made
as well as organic cotton material. It is also trendy to have clothing items that reflect what social

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
efforts you participate in as an individual. The clothing lines will have designs associated with
three issues: deforestation, Fair trade, and hunger in America. Each time an item is purchased the
customer will be given the opportunity to vote for an organization that focuses on those three
issues. At the end of the quarter (4 months) the votes will be tallied and the organization with the
most votes will get 50% of the proceeds and the other two organizations will get the rest of the
proceeds 25% each. This new campaign will target loyal customers that love Starbucks and
appreciate their community role as well as opening the door to new globally conscious potential
customers that were maybe not aware of the Starbucks efforts in global responsibility.
So it is our vision that together we will elevate our partners, customers, suppliers and
neighbors to use our scale for good. To be innovators, leaders and contributors to an inclusive
society and a healthy environment so that Starbucks and everyone we touch can endure and
thrive. - Starbucks Coffee Co.
SWOT Analysis
Strengths
Addition of new services,
including the Starbucks app, customer
rewards, easier way to make
payments, & high-valued amenities
Recognizable brand image
Large scale operations
Focus on employees
Opportunities
Ever-increasing existence in
the development of single-serve coffee
market in the US
Expansion in already coffeerich nations and emerging economies
Increase and expansion in
product offerings

Weaknesses
Quick expansion of worldwide
competition
Not targeted towards lowerclass individuals
Coffee beans price is the major
influence over profits
Threats
Introduction of Verismo
machines
Change in politics creating
increase in product prices
Lower quantity of raw
resources in the near future and rising
rates

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
Description of Competition
There are not many companies in direct competition with Starbucks. It is hard to maintain the
level of success needed to compete with Starbucks, however, Dunkin Donuts is on track to
becoming a serious threat of Starbucks. Dunkin Donuts initial marketing plan, using a character
named Fred the Baker, suggested that the companys main focus was on donut sales. Within the
past ten years, Dunkin Donuts has experienced a slow transformation from donut shop to coffee
house. It has been more recent that this transformation has been made public. According to
Sanburn (2013), Dunkin Donuts CFO Paul Carbone acknowledged a fundamental shift in
company strategy thats been happening internally for years. Were a beverage company he
said, while also putting to rest any hopes that Fred the Baker would be brought out of retirement.
Thats because for Dunkin, its not merely about making the donuts anymore. In 2012
beverages accounted for 58% of all sales at Dunkin Donuts locations in the U.S. Although
Dunkin Donuts is yet to promote a product like our Pour Your Heart Into It campaign supports,
it has a competitive advantage on Starbucks. Unlike Starbucks, Dunkin Donuts focuses the
average Joe, according to Armstrong (2013). He goes on to state that Dunkins customers
include more middle-income blue- and white-collar workers across all age, race, and income
demographics. He adds, by contrast, Starbucks targets a higher-income, more professional
group. Although Starbucks seems to be out of the reach of Dunkin Donuts, they are quickly
moving up in the coffeehouse industry.
Description of Customers
The Starbucks vs. Dunkin Donuts case study in the Introduction to Marketing textbook shares
the main audience of customers Starbucks has, the white collar crowd. Starbucks caters to the

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
middle and upper working class, rather than the blue collar worker. What this case study does
not mention is how Starbucks has a huge following audience of college students. Starbucks was
aware of the growing amount of college student customers and took action. USA Today reports
by 2007 Starbucks had 102 campus units mostly in student centers. Starbucks is known for
being customer friendly and having a work friendly atmosphere for those who come in and wish
to get some work done, meet with some friends or coworkers, or just relax and take a breather.
College students seek out such places for those purposes which is why Starbucks is a great fit for
their coffee needs. This generation of college students also are more socially aware and jump at
opportunities to be apart of social movements. Majority of starbucks customer ae socially
conscious as well, proving that the new campaign, Pour Your Heart Into It, will do very well
with Starbucks audience. This campaign will give Starbucks customers an easy trendy way to be
environmentally, socially, and economically responsible and give back to an organization of their
choice. This also gives them full control over their contributions which is pleasing to average
Starbucks customer who is busy balancing life. It is the simple, fast, fashionable way to give
back.
Marketing Strategy
Product Strategy
Pour Your Heart Into It is a Starbucks clothing line produced by American Apparel featuring
hats, hoodies and t-shirts. Each clothing item will come adorned with the name of the line, and
the image of coffee being poured into a Starbucks coffee mug with a symbol of the cause that the
item will represent. For example, coffee will be poured into a coffee mug that has a symbol of a
tree at the top to represent the deforestation epidemic. This clothing line will be part of an
initiative to focus on three areas within an array environmental issues: deforestation, fair trade,

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
and hunger in America. Each issue will be associated with an organization that specializes on
that particular concern: Green Peace will support deforestation, No Kid Hungry will support
hunger in America, and Conservation International will support fair-trade. When any product
from this line is purchased by a customer the tokens from the purchase will be categorized as
follows: hats give one token, t-shirts give two tokens, and hoodies will give three tokens. The
tokens will be used as individual votes that each customer can choose to give to the organization
chosen for each individual cause. Eighty-five percent of each purchase will go towards a
collective amount of the lines revenue, and at the end of the four month period in which the
apparel will be sold during the campaign, the tokens will be translated into votes, and the
organization with the highest number of votes will acquire fifty percent of the proceeds while the
other two organizations will each receive twenty-five percent of the remaining earnings gained.
This product fits into Starbucks strength of having a strong brand image, because with it having
environmentally positive products this will help the corporation gain access to environmentally
aware markets.. This will help to add another layer to their image by portraying them as an
environmentally responsible organization. It can also magnify their impact because the Starbucks
logo is one that can be recognized internationally for its high quality products.
The product positioning of the line will be aimed at being the apparel for the environmentally
conscious world citizen. When it comes to the positioning map with the extremes being luxury
and performance the apparel will lie somewhere in the middle of the positioning map with the
choices being between luxury and performance. Each item will be of quality and serve its actual
purpose as a t-shirt, hoodie, or hat. Its value position will be more for more. The amount paid for
the apparel will not only go for a product made of quality, but towards a goal that many
consumers would want to support. To the more environmentally and socially conscious coffee-

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
drinker who want to indulge in their addiction and simultaneously partake in a campaign for the
greater good, our Pour Your Heart Into It line is a line of clothing and apparel that gives you the
chance to be a part of a bigger impact that no other coffeehouse can give you. What will make
Pour Your Heart Into It different from other clothing lines will be the resources used and how the
profits are used. As discussed earlier, a large portion of it will go towards a collection of all the
proceeds from the sales, which will then be allocated separately as determined by the amount of
votes that each organization gets. This will also be the first line of apparel created from the
Starbucks Corporation which will automatically distinguish it from any other Starbucks product
or service. The type of consumer that needs this product is satisfying an individuals need for
clothing and apparel, the desire to wear something that represents a brand that they stand behind
and enjoy, and the desire to provide help towards organizations that work to end the three
environmental issues at hand. This would also feed into the mentality that many shoppers have to
buy only products made in America. The research conducted by Jim Butschli in his article "Made
in the USA" Influences Shopper, states that four out of five consumers will notice if an item has
the label Made in the USA, and 76% of these same shoppers claim that they are more likely to
purchase said product after noticing the Made in the U.S.A claim. (Butschli, 2012)
The name that we chose is based off of the title of a book written by the Starbucks CEO Howard
Schultz, with its complete title being Pour Your Heart Into It: How Starbucks Built a Company
One Cup at a Time. The logo will be the same one that was used on the cover of the book with
the words being poured into a coffee mug, with the color being the same green that is used in the
original Starbucks image. The words will be the color white to be easily seen on the four chosen
colors for the apparel, which is brown, gray, black, and forest green. The print font will be futura,
because it is popular, and easily legible on clothing. The images on the t-shirt or sweatshirt will

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
depend on the chosen cause, however a simple coffee mug with the starbucks logo will be
present on each item.
Pricing Strategy
To determine the price the strategy used will be value-based pricing, because the apparel will
serve more than just its original purpose will also serve as a symbol to show that the person who
owns it has made a contribution towards sustainability. The apparel will be priced using the
value-added strategy, because the fact that purchasing the product will have a far-reaching
positive impact adds value to each purchase.
The price of the hoodie will be twenty-five dollars, the t-shirts will be fifteen dollars, and the
hats will be ten dollars. We chose this price, because of the organic cotton material, and the aim
to try and gain as much as possible for the collective proceeds that will be divided at the end of
the four month campaign. The research we conducted is based off the general outfit of a
Starbucks customer. We have also compared our prices to popular clothing stores, such as
Forever21, Dillards, Macys, and others. Our prices are mainly based off of very popular
clothing stores that a majority of the customers visit.
Distribution Strategy
The strategy to sell our apparel line will be to sell it in Starbucks locations and on the Starbucks
website. The reason we chose this distribution strategy is to reduce the cost of having to make
contracts with other stores in order for them to agree to sell their products. It will be an exclusive
strategy in which the team plans to cut out the middle man, allowing more focus and resources to
be aimed towards the quality of the product and the ability to sell it. The only retailer of the Pour
Your Heart Into It line will be the Starbucks corporation. We have chosen to do this, so at the end
of the selling campaign the most amount of money possible will be raised.

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
Marketing Communication Strategy
Promotional strategies that will be used by the team to promote the product will be mainly
through word-of-mouth, because Starbucks customers are very loyal to the corporation. There
will be paper handouts at select Starbucks locations in order to get the word out. The team will
also focus on using traditional mass communication advertising, such as the use of the internet,
the Starbucks email list, the Starbucks app, and its own personal website and blog. The main
focus will be on two areas: online and mobile marketing, and event marketing.
As a company Starbucks already has the benefit of having a notable customer following, internet
presence, and popularity of their smart phone app. This would be used as a way to notify their
customer base about the introduction of new products, deals, and other happenings of the
corporation and its products. This would also give them the upper hand of being some of the first
customers to purchase the merchandise, which many consumers find appealing when searching
for new products. Event marketing would be useful, because by sponsoring a concert by a
popular artist, or a convention with famous speakers the brand will be exposed to more attention
at that time.
The television advertisement will be aired on channels that cater to showing news information,
business information, and television stations that cater towards the younger generation like MTV
and VH1, because it seems that Starbucks greatest amount of consumers are divided between
these two extremes in age, occupation, and maturity. They will also be placed online on popular
video hosting websites, such as YouTube and Vimeo. Ads will also be placed within the phone
application, and inside of emails that customers can subscribe to. Picture advertisements will also
be placed in popular teenage and female magazines.

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013

Appendix
Product Picture:

Description of SWOT Analysis Bullet Points:

Opportunities
Increase and expansion in product offerings
In the Fall of 2010 Starbucks introduced an Evening Menu only to limited locations. This
Evening Menu included adult beverages such as beer and wine. Starbucks had been previously
testing to expand on these particular products in other countries (Spain). The announcement of
the new expansion, of course, lit up social media from consumers excited about the new addition.
Many consumers were accepting about the new products; restaurant experts felt that selling
alcoholic beverages could upset community groups and complicate the companys operations.
Executive vice president at consulting firm Technomic, Bob Goldin, said The new business
opportunity may not outweigh the headaches. Many other experts focus in on the fact that
Starbucks is no stranger to venturing into new territory and this could lead to an even broader
audience of loyal customers. Starbucks is already known for their environment, a lounge
atmosphere to be comfortable in targeting upper working class and college students. So adding
the Evening Menu would allow already loyal customers to bring in more customers to meet,
study, or just congregate over a drink after work or class. (Baertlein)

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
Rachel Antalek, the director of new concept development at Starbucks Coffee Company says,
"This concept is trying to deliver the same atmosphere and the same service that everybody's
grown to love and expect from Starbucks. We're constantly innovating and trying new things,
and this is something our customers have asked us for that in a lot of ways hearkens back to
European coffeehouse heritage." Outside observers have said that mixing fast service with
serving alcoholic beverages could be a clash, yet as mentioned earlier Starbucks has taken on
new ideas and broken through boundaries proving critics wrong. (York)
Expansion in already coffee-rich nations and emerging economies
Starbucks made a huge announcement August 26 that they will be expanding to the already
coffee-rich nation of Columbia. One main problem occurring in the area rose about after
massive flooding, which created difficulty recovering for coffee farmers in the area. Jaun
Valdez, Bogotas largest coffee company is experiencing serious low-points.
Due to these issues, Starbucks has found a solution: expansion. By 2018, the company wishes to
have stores country-wide. Although the expansion of Starbucks is a threat to the already
stationed coffee companies, CEO Howard Howard Shultz believes this expansion will be both
good for his company and the others in the nation. This expansion could possibly lower prices
for United States planted stores because Starbucks imports the coffee beans directly from
Columbia. (Otis)
Ever-increasing existence in the development of single-serve coffee market in the US
With the ever-increasing coffee industry introducing single-serve coffee makers, there was no
question of the nations largest coffee-selling company would soon enter the scene. The Kuerig
coffee machine quickly swept the nation, but shortly after its introduction, Starbucks released
their own version of the single-serve coffee machine, the Verismo.
Unlike the Keurig, which simply brews black-roast coffees, the Verismo machine promises
instore quality drinks at home. The company plans to promote the new machine in stores by
offering free samples and discounts. Howard Shultz believe this new machine will allow
Starbucks to join in to the coffee-industry expansion. (OToole)

Strengths
Large scale operations

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
As a Fortune 500 company it operates at position 208, and employs 160,000 people. Listed as the
world's number one specialty coffee retailer, Starbucks has more than 18,000 coffee shops
opened in about 60 countries. The outlets offer diverse array of coffee drinks and food items, as
well as roasted beans, coffee accessories, and teas. The company also operates more than 9,400
of its own shops, which are located in about 10 countries (most which are located in the US),
while licensees and franchisees operate roughly 8,650 units worldwide (primarily in shopping
centers and airports). The company also owns the Seattle's Best Coffee and Torrefazione Italia
coffee brands. In addition, Starbucks markets its coffee through grocery stores and licenses its
brand for other food and beverage products.
Recognizable brand image
Starbucks brand image is one that can be recognized internationally for its high quality products
and its continuously-positive consumer experience that have assisted the company in building a
strong brand image. At one point it was ranked at the 91st position in the 100 Top Brands 2006
ranking of BusinessWeek and Interbrand, an international branding consulting firm.The
BusinessWeek-Interbrand combine valued the Starbucks brand at $3,099 million in 2006, up
from $2,576 million in 2005.
Addition of new services leading to customer satisfaction
Starbucks has managed to draw in and keep customers through the lure of not only their
caffeinated beverages, but the resources they make available to their customers, such as free wifi.
They have adapted to the new technological age by creating a phone application for their
customers to keep in close contact with all the new introductions and going ons of the company.
Other services provided are the new ways of payment such as the Square, and a customer using
their phone to pay for their order they have opened the doors to making it easier for their
customers to order what they want and already have it paid for which is cutting down their
waiting-in-line time. Innovations such as the Square have allowed the company to expand,
because by adopting this new form of payment they were able to place someone from their own
company at Squares board.
Going out of their way to make the atmosphere of their stores into an ambiance that one can
settle into is also one of the factors that have helped them to stay on top, because unlike Dunkin
Donuts they equip each store with comfortable furniture as a way to get their customers to take a
seat and relax.
Focus on Employees
The company gives much respect to their employees, which could attribute to the
growing success of Starbucks. An article published in Strategy+Business (2002) magazine states
All employees, regardless of position, are called partners because they all receive stock
options, which promotes the idea that all of Starbucks employees are committed to and believe
in the success of the company.

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013

Threats
Introduction of Verismo machines
The introduction of the new Verismo machine could create a threat to the Starbucks locations.
This product as described by Munarriz (2012), is designed to make Starbucks-quality espresso,
cappuccino and latte beverages at home, without ever having to line up before a hurried barista.
If this single-serve coffee maker is as successful as the competitor, Keurig, it is sure that traffic
within Starbucks locations will decrease.
Change in politics creating increase in product prices
Just as we see an increase or decrease in gas prices with a new president, we also see a
change in everyday items. With a change in politics, most businesses can expect a fluctuation in
wholesale prices of their necessary items. The same goes for Starbucks. As our political leaders
change, our political ideas and goals change, which affect our trading and buying and selling
with other nations. As the politics change within America and the other nations, Starbucks can
expect to see many fluctuations in coffee bean pricing and other necessary supplies for everyday
production.
Lower quantity of raw resources in the near future and rising rates
Americans are known for their high consumption of raw resources. In the annual study
conducted by the National Coffee Association (2013), it was found that coffee consumption
increased by five percent. This statistic alone shows that with a continuous increase in coffee
consumption, it is expected that the quantity of resources will annually decline.
Weaknesses
Quick expansion of worldwide competition
Dunkin Donuts is quickly increasing sales throughout the United States. Although most
of the sales are taking place in the western U.S, an increase in profits can be seen nationwide.
Just this year Dunkin Donuts reported a thirty-six percent increase in revenue for the third
quarter (Jennings, 2013).

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
Not targeted towards lower class individuals
According to a study conducted by Dunkin Donuts, research showed that customers
believed Starbucks targeted higher-income individuals (Armstrong, 2013). This is a weakness
because it creates an increase in price and provides an opportunity for competitors to steal
customers of the known brand.

Coffee beans price is the major influence over profits

As stated previously, the price of items continuously changes from day to day.
Consumers are unable to see effects of the fluctuation of pricing, however companies feel the
effects daily. Revenue depends on the amount of profit, which changes based on the price of
necessary supplies. The constant change in the price of coffee beans affects Starbucks and other
national coffeehouses due to a sudden increase or decrease in profit.

Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013
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Dr. Eve Rapp
December 4th, 2013
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Introduction to Marketing
Dr. Eve Rapp
December 4th, 2013