TABLE OF CONTENTSI. EXECUTIVE SUMMARYII. SITUATION ANALYSISIII. OBJECTIVESIV. MARKETING MIXV. INFORMATION SOURCESVI. CONTINGENCIESVII. BUDGETVIII. IMPLEMENTATIONI.EXECUTIVE SUMMARYII. SITUATION ANALYSISA SWOT analysis was created to identify the strengths and opportunities while highlighting theweakness and threats presented in the marketplace. It is wise to do a SWOT analysis because itrecognizes factors in each category to help make clear strategic business strategies.STRENGTHSCONVENIENCE (21,366 STOREWORLDWIDE)PUBLICITYSHARE LEADERWEAKNESSESPRICEPEOPLE THAT DO NOT ENJOY PUMPKINFLAVORED PRODUCTSOPPORTUNITESTHREATSPRODUCTSCOMPETITORS WITH CHEAPEREXTEND PUMPKIN SPICE TO K-CUPSSOLD IN STARBUCKSEXTEND PUMPKIN FLAVORS TOCOMPETITORS WITH PUMPKIN SPICEPUMPKIN FLAVORED PRODUCTSFOOD/PASTRY OPTIONSSTRENGTHSStarbucks is the king of all coffee companies. With over 21,366 stores worldwide, the chainrecorded its highest ever annual revenue of 16.45 billion U.S. dollars last year (Statista, 2014).Starbucks has been incredibly successful at maintaining share leadership in the coffee business.With extensive amount of time and money spent in publicizing the pumpkin spice latte,Starbucks has sold over 200 million pumpkin spice lattes since the launch in 2008 (Gillespie,2014). On just one single social media network, Instagram, over 19,000,000 people have usedposts regarding Starbucks with over 500,000 posts pertaining to pumpkin spice latte. Starbucks isspot on when it comes to maximizing its efforts to publicize the pumpkin spice latte and thebrand itself in the fall season.WEAKNESSESThe number one complaint in the feedback Starbuck receives from the consumers is that theprice of Starbucks products are too high. In an August 2008 survey, 73% of all adults saidStarbucks was overpriced (Rasmussen Report, 2011). What people do not take into account isthat the high price of Starbucks products are due to a number of reasons. Starbucks has locationsin more luxurious areas to create ambiance that people enjoy from Starbucks, thus rent is moreexpensive. Marketing and brand expansion is very costly as well as the brand research andproduct development. These are just a few of the many reasons that go into the price ofStarbucks products being so expensive. Another weakness that Starbucks faces is that someconsumers really do not enjoy the taste of pumpkin spice latte for the fall. Until this year in 2015,pumpkin spice was the only fall flavor that Starbucks offered. Fortunately, Starbucks just cameout with a new flavor, Toasted Graham to adhere to the consumers that are not pumpkin spicelatte fans.OPPERTUNITIESSeveral opportunities present itself to Starbucks that could help the business grow even more inthe Fall season. There would need to be an extensive amount of research performed tostrategically plan sectoring into new markets. However, with the pumpkin spice flavor alreadyavailable in coffee form for the fall, it would be beneficial for Starbucks to extend the pumpkinspice flavor to other products such as k-cups for consumers that are Keurig users. Starbucksalready offer over 18 different flavors of k-cups so adding a seasonal pumpkin spice latte k-cupto the market would be advantageous for Starbucks. With that being said, extending the pumpkinspice flavor to the pastries that Starbucks offers would be crucial to the seasonal market.Starbucks consumers have been crazy about the pumpkin spice latte ever since Starbucksintroduced it to the market in 2008. People are craving more of the flavor in any way they canget it. Adding a pumpkin menu would take advantage of the fall season food cravings andincrease sales. It would tap into a market that Tim Horton’s and Dunkin Donuts have started tocreate due their seasonal pumpkin menu selectins already in place.THREATSThe threats that Starbucks struggles with is competitors trying to mimic their strategy withtapping into the pumpkin flavors for coffee at a more economical price. The top two competitorsin the food and beverage industry that rival against Starbucks is McDonalds and Dunkin Donuts.A comparison of prices for the three restaurants was developed to with the following results:Starbucks average price of a tall(small size) pumpkin spice latte is $4.68 (Fast Food Menu Price,2015). McDonald’s small pumpkin latte is $2.63 (Fast Food Menu Price, 2015). Last, DunkinDonuts small Pumpkin Latte is $2.96 (Fast Food Menu Price, 2015). Starbucks has the highestprice compared to the two other competitors with similar products. This can be a threat toStarbucks due to the fact that price is a big factor on whether people choose one product overanother. Especially in scarce times, one of the first luxury items people will cut down on iscoffee.(Is there a source for this comment?) If coffee is less expensive, people will not feel asbad buying it. But when times are hard and money is low, people will not want to pay $4.68 for asmall flavored coffee.III. OBJECTIVESMarketing StrategyStarbucks’ marketing strategy is based on providing the perfect cup of coffee (StarbucksMarketing Strategy Unconventionally Effective, n.d.). The way Starbucks’ differentiates itselffrom competitors as a superior coffee provider is through the following tactics:Product SelectionInnovationConvenienceOur marketing strategy will add value to our brand through offering our target market moreflexibility for when and how they enjoy their favorite seasonal Fall beverages made byStarbucks.MissionStarbucks’ mission is “to inspire and nurture the human spirit-one person, one cup, and oneneighborhood at a time†(Company Information, 2015).Objectives:1. Introduce a Fall seasonal K-cup portfolio in retail stores starting with the introductionof Pumpkin Spice Latte, and then to expand to offering Salted Caramel, and ToastedGraham seasonal fall offerings2. Continue to grow Starbucks’ brand awareness in consumer packaged goods3. Contribute 3% of Starbucks’ revenue growth next year, worth a gain of $13.7MMfrom K-cup sales from the Pumpkin Spice Latte flavor in September and Octobermonths4. Gain +0.4pts of $ Share in the single-serve segment of the coffee category duringSeptember and October Months, which would land Starbucks’ $ share of the singleserve category at 17.1%Reasoning behind ObjectivesStarbucks’ values “Acting with courage, challenging the status quo and finding new ways togrow our company and each otherâ€(Company Information, 2015). That being said Starbucks isalso performance driven looking to continue to be the most successful coffee chain, with a networth of $969 million (Cagahstian, N., 2015). The objectives were determined by the ability theywould allow Starbucks to maintain its category leadership in the rapidly growing single-servecoffee category. The Trefis Team (2015) writes that “Starbucks has been able to beat the marketexpectations over several consecutive quarters, with an 18% year-over-year (y-o-y) growth in thenet revenues in its June-ended quarter of 2015. Riding on high K-Cup sales, strong single-servemarket share, and a gradual increase in customer traffic, the coffee giant has been posting robusttop-line growth numbers.†It is beneficial for Starbucks to be the leader in a category that isgrowing. The objectives listed above are reachable in the next year. The first year of launchingStarbucks’ Pumpkin Spice Latte seasonal flavor will provide the company a platform tointroduce the remaining two seasonal fall flavors of Salted Caramel, and Toasted Graham thefollowing year if, and only if, the Pumpkin Spice Latte provides the anticipated growth to thesingle-serve coffee category. At this time, there is not a set plan to launch to the additional twoflavors. These objectives for launching the Pumpkin Spice Latte k-cup are believed to bereachable by next year due to the success the seasonal flavor has seen in Starbucks’ chain stores.Target MarketThe target markets defined are categorized into three segments; “Coffee Drinker Aficionadosâ€,“Coffee Drinker Perfectionist, and “Coffee Drinker Loyalists.†The main marketing focus is tosell to these identified target market segments. We believe these target markets are clear andreachable customers. Each of these types of coffee drinkers have an age range of 18-40 and areboth male and female.Coffee Drinker Aficionados- This group knows their coffee hands down. They happily try newcoffees flavors and types. We can’t wait to get them to try our new Pumpkin Spice Latte in a Kcup because these consumers are the best at spreading the word of a great coffee to otherpotential consumers. We think these consumers will be impressed right off the bat that we wereable to make our k-cup offering as good as what we serve in our stores.Coffee Drinker Perfectionist- this person refuses to accept anything less than perfection. That’swhy they consistently choose Starbucks as their go to brand of k-cups. They know they won’t belet down with our brand.Coffee Drinker Loyalists- This group is compiled of our best customers. When they find abrand of coffee they like they stick to it. We already have a solid base of Starbucks brand loyalistand we can’t wait to provide them with this convenient option of their favorite fall season drinkin a k-cup.IV. MARKETING MIXBelow are the details on the marketing mix behind the launch of Starbucks’ Pumpkin Spice Lattel in a k-cup form.A. Product: Starbucks is launching our Pumpkin Spice Latte Fall seasonal flavor in thesingle-serve k-cup coffee form to be used in the popular Keurig coffee machines.B. Price: Starbuck’s will price its new product at a premium while staying within 20 centsof its main competitors Dunkin Donuts and Mc Café price per k-cup pod. This is becausewe feel that Starbuck’s offers the best cup of coffee to our target consumers, and they arewilling to spend the extra few cents per pod for the difference in the experience weprovide when they drink our coffee.Source: Target.comC. Promotion: We are trying to reach customers aged 18-40 years old as they make up 69%of our sales. Within that age range we are trying to reach each of the three target marketsthat we identified as “Coffee Drinker Aficionadosâ€, “Coffee Drinker Perfectionist, and“Coffee Drinker Loyalists.†Our message will be that our consumers will now be able tomake their favorite fall seasonal drink in the comfort of their own homes any time theywant it. The medium we will use to advertise and market our seasonal product will bethrough magazine ads, top retailers, and websites. After that, we will leave it to ourconsumer’s word-of mouth to keep the news spreading. This will position our product asa high-end great tasting option now offered in a single-serve coffee format that won’t lastlong. It will be positioned the same way as our Christmas seasonal products. We hopeconsumers will remember to stock up because after Halloween our Pumpkin Spice LatteK-cups will be off the shelf.D. Place: We will launch our k-cup Pumpkin Spice Latte k-pods first in the U.S. top retailerssuch as Walmart, Kroger and Costco. We expect to have high ACV % store levels rangingin the high 60’s for our first year. This product will be sold in retailers as well INFORMATION SOURCESWe think that Starbucks has a very strong marketing plan. It has proven to be verysuccessful for them in the past. Starbucks has relied on a high quality, delicious, sociallyconscious product and excellent customer service to sell itself in the past. Due to the perceivedquality of their product, Starbucks has been able to command a higher price than many of itscompetitors. The consumer has been willing to pay this price in the past. However, with the riseof new competitors and the increasing price of milk, this may change.Cheaper, equally tasty, alternatives are becoming available. Starbucks has recognized thisthreat and has begun to change their marketing programs. Starbucks’ marketing plan can beevaluated in many ways. One is to observe how their marketing share and stock prices performduring the next fiscal year. Will they be able to expand and continue to build over 1,000 newstores each year?Their economic growth during the next few years can be used to evaluate their marketingplan. One can also evaluate Starbucks’ marketing plan against how well it follows Starbucks’mission statement and objectives. If these are not compatible, there is a good chance that theirmarketing plan will not be as successful as it could be if they meshed well. The effectiveness ofStarbucks’ marketing plan can also be evaluated through customer satisfaction. This can bemeasured in several ways, such as sales, customer comments and complaints, and consumer’sperception of the brand. If sales start todecline at Starbucks, it will be a clear indicator that theirmarketing plans may not be as effective as they had hoped. It is unlikely that customers will staywith Starbucks if they are not satisfied.The commitment to quality and customer service will lead to customer commitment. Ifcustomers have received consistent, high quality services and products in the past, then they aremore likely to continue purchasing this product in the future. Creating a relationship with thecustomer by recognizing them as they walk into the store and knowing their drink orders willalso retain customers.This creates a pleasant atmosphere that customers will want to frequent. Customers mayeven feel disloyal if they switch brands because they have been drinking Starbucks coffee formany years. Starbucks can use consumer information in order to determine what market trendsare emerging and new ways to grow their company. Consumer responses can help determinewhere competitors are outselling Starbucks as well. Starbucks has been committed to customerservice since it opened and will remain focused on this going into the future. Keeping close tabson customer needs and wants will help keep them in the forefront of coffee sales nationwide.V. CONTINGENCIESEven if the recommended solution involves lower amount of initial investment outlay andlower risk, there could still be several contingencies. Firstly, Starbucks tend to sell their ready-todrink, ground coffee, and coffee bean products at a higher price than most of its competitors inthe grocery channel. People might choose other cheaper products instead of Starbucks’ becauseStarbucks had been selling ‘experience’ as a premium on base price at a store level.Consequently, people buying coffee products at grocery store might not experience the‘premium’ and might be reluctant to pay extra price for such products. Secondly, if HowardSchultz chose to sell such products in a lower price than in the store level, Starbucks might loseits brand image as a premium coffee producer.Also, Starbucks’ products might not be conceived as ‘luxury goods’ any longer. Thirdly,entering new markets such as Europe and Asia may encounter risks that could not be predicted ormitigated. For example, there had been a long tradition of tea culture in China so that it would bedifficult for Chinese people to drink coffee instead of tea. Starbucks has a very innovativeresearch and development program for their new products.The company is always looking for new ways to make the Starbuck experience morepleasurable for its customers. On November of 2001 the company introduced its new productcalled the Starbuck’s card. The Starbuck card is like a gift card that provides store value for itscustomers.The goal of this new card implantation is to reduce the time spent paying for drinks.Since it introduction the Starbucks Card has been very popular with its customers as it provides abetter way to enhance customer experience. “Another implementation was to save on the amountof time it took to make drinks in the ice scoops. Engineers at Starbucks notice that baristas had totake two scoops of ice when making venti-size colddrinks.They then went back and redesigned the ice scoop. When the stores started using the newscoops, it “shaved†off about 14 seconds from the preparation time of the drink.†This newimplementation was part of the company’s goal of getting the drink to its customers in threeminutes or less. Starbucks is always looking for new ways to improve their products and servicesto their customers. If a customer has a problem or a comment they can turn it into the forum pageoff of the company’s website. By doing this the company is able to get customer feedback to allof its new ideas and products. Starbucks is competing in an industry where marketing principleshas to follow the differentiator strategy or they will lose market share. The company goal is tocreate high value for its customers, or the customers will simply find another place to spend theirmoney. Starbucks marketing principles are the basis of the company’s competitive advantagewithin the coffee industry. Starbucks products are associated with high quality, and the companydedicates itself to producing high quality products. Because of this association with high quality,Starbucks has been able to charge a higher price or premium for its products. As long as thecompany can protect its reputation for high quality and strong values, it will be able to maintainits premium prices.Starbucks’s strength is the premium positioning. It can be a major threat forits future growth. As there is a much growth in economical segment especially in emergingeconomies. They are changing by broadening their menu. They are also introducing newvariations in their menus to cater to the broad market. They have succeeded as they are growingrapidly and their market share is increasing. They are changing themselves by appointing newfranchisees and diversifying internationally.BudgetIn 2011 Starbucks Corporation and Green Mountain Coffee Roasters, Inc. began astrategic relationship for the manufacturing, marketing, distribution and sale of Starbucks(R) andTazo(R) tea branded K-Cup(R) portion packs for use in GMCR’s Keurig(R) Single-Cup brewingsystem[ CITATION Sta11 l 1033 ].Starbucks annual marketing expenses include many components, one of which isadvertising costs. They expense most advertising costs as they are incurred, except for certainproduction costs that are expensed the first time the advertising takes place. Marketing expensestotaled $315.5 million, $306.8 million and $277.9 million in fiscal 2014, 2013, and 2012,respectively. Included in these costs were advertising expenses, which totaled $198.9 million,$205.8 million and $182.4 million in fiscal 2014, 2013, and 2012, respectively[ CITATIONSta14 l 1033 ].We will assume for the fiscal year 2015 the advertising budget will be around $195.67million the average from the last 3 fiscal years and we will further assume that the budget will bearound the same for fiscal year 2016. Since the Pumpkin Spice Latte is a seasonal flavor we willneed to budget and plan for a marketing and advertising campaign that starts in September of2016 and ends in December of 2016. Starbucks will need to earmark around $3.1 million oftheir $195.67 million advertising budget for this seasonal campaign.This new product will be marketed and advertised on a national level through 3 mediums;magazine ads, retail stores and websites. AARP The Magazine is the #1 subscribed consumermagazine in the U.S., Better Homes and Garden is the #3 subscribed magazine in the U.S. andFamily Circle the #6 subscribed magazine in the U.S[ CITATION Nea14 l 1033 ]. We will run a½ page ad in all 3 publications for 4 months and we will need to develop an ad that will have anaverage cost of $199,150 to design for a 4 color ad [ CITATION Web15 l 1033 ].2016 Magazine ExpensePublicationAARP TheMagazineBetterHomes andTarget ReaderFrequencyRateTotal50+ Market – Tech Savvy4 months$129,270$517,080Women – HomeEntertainment4 months$391,700$1,566,800Notes1/2 Page Ad4 Color1/2 Page Ad4 ColorGardenFamilyCircleFamily – Parenting Newest Trends4 months$201,300$805,2001$199,150$199,1501/2 Page Ad4 ColorAd Set UpCostGrand Total$3,088,230Point of purchase sales will be done thru the top 3 retail chains in the U.S.; Wal-Mart,Kroger and Costco[ CITATION Nat15 l 1033 ]. After the initial campaign, if sales are strongenough the product will be released to other retailers such as Target, Walgreens and CVS. Thesedistribution and marketing channels are already established and apart of the current cost of salesin the U.S. market. The same established channels and cost of sales will be assumed for salesand marketing on and A new web ad campaign will have to bedesigned for the new product and the average campaign cost $9,000 to develop(WebpageFX,2015).2016 Web CampaignPublicationStarbucks.comTargetThe Coffee EliteFrequency1Rate$9,000Total$9,000NotesWeb DesignAccording to Starbucks Fiscal Year 2014 report the average Cost of Sales for 2014 and2013 was 59.95%[ CITATION Sta14 l 1033 ]. That meansthat for every $1 earned almost $.60is attributed to the cost of sale. Seasonal Starbucks K-Cups are currently online for sale at $24.95 for a 24 count pack of K-Cups[ CITATION Sta15 l 1033 ]. Thattranslates into 124,138 units needed to pay for the magazine and website ad campaign costs.Seasonal KCup 24Count Price$24.95Cost of Sale100%$24.950-123,777 Units SoldCost ofProfitMagazine AdMargin 0%Campaign$0.00$3,088,230UnitsNeeded AdCampaign123,777Profit fromUnits Sold$0.00Seasonal KCup 24Count Price$24.95Seasonal KCup 24Count Price$24.95Cost of Sale100%ProfitMargin 0%$24.95$0.00Cost of Sale100%ProfitMargin 0%$24.95$0.00Cost ofWebsite AdCampaign$9,000TotalCampaignCost$3,097,230UnitsNeeded WebCampaign361Profit fromUnits Sold$0.00Total UnitsNeededTotal Profit124,138$0.00In summary in orderfor K-Cup Pumpkin Spice Latte ad campaign to be a success, sales of124,138 units must be achieved in a 4 month period. After that amount is reached the Cost ofSale Ratio that Starbucks reported in 2014 will become the rule of thumb for further sales of theseasonal product. For example: If Starbucks sold 175,000 Pumpkin Spic Latte K-Cupsin 2016they would net a profit of $507,602.76.Seasonal KCup24Count Price$24.95Cost of Sale60%$14.97Units Sold Above 124,138TotalProfit175,000Margin 40%124,138*$9.9850,862Profit:50,862x $9.98507,602.76Cost:50,862x $14.97$761,404.14ImplementationThe implementation phase of the Starbucks Pumpkin Spice Latte K-Cup will address thewho, where, when, and how of effectively implementing the product into the market. Effectivemarketing implementation begins with managing the activities. Measuring, controlling, andaccountability will be crucial during the implementation phases of the new product launch.(Lautenslager, 2005) Specific tasks along with timelines will be assigned to both individuals andgroups in order to ensure timeliness, accountability, and will be implemented in phases. Thewho, what, where and when have already been determined in the marketing plan by establishingthe target, objectives, mediums; therefore, the implementation will clarify roles, responsibilities,and deadlines.Initially, a project management team will be chosen consisting of key players from keydepartments including supply chain/manufacturing, marketing/design, finance, and humanresources. Starbucks already has key infrastructures in place that will allow this precursor ofimplementation to be smooth and effective. The project management team will oversee fourphases of the Starbucks Pumpkin Spice Latte K-cup project. The first phase will consist ofdesigning and development. The second phase will consist of building and deployment. The thirdphase will consist of operations and monitoring. The fourth phase will consist of feedback andimprovement. The benefit of implementing in phases is that it will provide a chance to evaluateearly without overwhelming and provide a response to feedback in order to adjust and improvethe implementation.Phase 1: Design and Development- First and Second Quarters of Fiscal Year 2016Phase one will entail the following primary functions:Product design and product testing in control groups as well as more extensive analysisand evaluation of market data to determine which regional markets to target initially.The project manager, along with human resources, will establish a team of project specificdesigners and developers as well as assign a product design team lead that will coordinate andprovide reports of activities responsible during the f…

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