Table of Contents
The retail coffee market has grown exponentially in the last few years as more and more working professionals and individuals have switched over to coffee as their beverage or refreshment choice. It has seen tremendous growth in the past five years as the caffeinated beverage choices as more consumers have opted for the more expensive beverage options available in the market. This combined with increased work or house related stress which has, in turn, increase the consumption has shifted the entire industry towards a higher-end and higher profit margin option. Thus the organisations engaged in this sector have seen an increase in the profit and revenue generation over the years (Chernev 2018).
One of the major players in this industry is Starbucks, which is renowned by many to produce high quality and often times costly drinks for its consumers. As such high quality of it’s product along with a high price level for its range of products has created an elite image of the company in the industry. The company is also seeking to expand its outlets in Malaysia to reach even more customers (Benson 2018).
Starbucks is an American based company which has its own chain of coffee retailers in major countries and continents all throughout the world. The company was initially founded in Seattle which is located in Washington back in the year 1971. Since, its inception the organisation has grown immensely throughout the world and has grown to include nearly twenty-eight thousand outlets worldwide, making it one of the largest chains of coffee retailers in the world. Starbucks has also revolutionized the concept of coffee serving and coffee drinking by introducing their in-house developed coffee concept called “second wave of coffee”. This concept has distinguished itself by the way coffee is tasted by uplifting its quality and also improving the experiences of its customers. Since the time there has also been another concept called the "third wave of coffee" which has also been introduced to target the like-minded coffee consumers by serving these customers handmade coffee rather than a machine made the beverage with light roasts to enhance the taste (Zhao 2018).
But Starbucks has aimed to prepare the coffee with automated espresso machines for better efficiency and also keeping in mind the safety of their customers and the consumers (Boaventura et al 2018). In due time, Starbucks has grown to introduce more range of products like hot and cold drinks, micro-ground coffee and whole-bean coffee. Since, being set up in the year 1971, Starbucks actually had a rocky start and first became profitable to its owners in the year 1980.
After this the company had some problems and failures when it expanded into the British Columbia and the Midwest. But, all these problems vanished with its venture into California by the 1990's (Han et al 2018). The first venture of Starbuck outside America came in the form of Tokyo which happened in 1996 and after that the company has only expanded further into even more countries and currently the overseas or the international properties or stores contribute nearly one-third of its total number of retail chain and outlets (Atzori 2018).
Back in 2008 Howard Schultz who was the chairman and the president along with being Chief executive of Starbucks was quoted as saying that the year of 2008 was a transitional year for the entire organisation and that he was positive that the reduced frequency regarding the consumption of coffee in regards of the American population would not severely impact their profits for that year. Currently the organisation is aiming for a reorganisation of their business on an international scale and the re-emerging has internationally has been their policy for now. All these policies are already functioning as the company is trying to create a difference in regards to the life of common folks and working individuals. This has also helped the organisation in becoming a leading global level economy (Pateh 2018).
And in fact this goal of world emergence or reorganisation is actually going in the right direction and proving fruitful for the company with the emergence of its outlets in various nations and countries along with its presence in numerous metropolitan cities around the world (Lim 2018). The list of countries on the list of operation of Starbucks are Australia, HongKong, Canada, Japan, Israel, Japan and several other countries.
The company is also aiming to release more outlets and coffee retailers in developing countries like India, Brazil and Russia and Malaysia as well. Overall, it can be observed that this objective of Starbucks to become a global phenomenon in regards to the coffee market along with becoming an internationally renowned brand seems to be working for the betterment of the organisation (Chandon 2018). The company has generated a profit of 4.2 billion dollars from the beginning of the year 2017 up until the month of October. The profits have been recorded to be nearly sixteen percent more than the last year’s entire profit. Thus, it can be concluded that there has been a significant improvement in regards to the profit margin from the previous year with the adoption of this approach.
The story of Starbucks started in the year 1971 from a humble background as the coffee maker used to occupy a single house at the end of the street (Cristea 2018). Back then the organisation was a retailer of the whole bean, ground coffee and tea along with some spices and used to occupy a single storefront in Seattle's Pike Place Market. Today the company has grown bigger and better and has expanded its chain of outlets to several countries and continents.
The company has around 24,000 retail stores with its presence spanning seventy different countries across several continents. Starbucks has also derived its name from a folklore called Moby Dick and has gotten its name from the first mate in that piece of literature. The company since its inception has also set a goal for its working which is quite noble in its pursuit which is the only mission all and all and that is to nurture and help prosper the human spirit counting each person, each cup and each neighbourhood at a time. The people working at Starbucks are not just passionate about their products but they also undertake extra efforts to please their customers and enhance their experience so that they are compelled to visit the place again and again and each time they return with sweet memories of the place.
From the time of its inception the company has set out not only to celebrate the coffee and the rich tradition associated with it but also has brought forth a feeling of connection among different individuals of different personality types or of different cultures and with each passing day they are getting closer to that goal which they had set out to achieve since their beginner days. As such they not only provide great coffee but also a rewarding in-house coffee experience which is unrivalled and cannot be experienced elsewhere.
Rebranding refers to the change in the brand image and the general look and feel of a company by creating or generating new look, logo along with a new range of products to better adapt to some specific customer base (Fournier 2018). In regards to Starbucks Malaysia rebranding refers to specific changes in its logo along with the inclusion of certain products in its range which is generally preferred by the local or the national population. To expand further around the world and especially in a new country like Malaysia, Starbucks has preferred to use indigenous materials like coffea arabica and coffea canephora to make it more likeable for the locals (Cian et al 2018).
If somebody was to observe the look and detail out the changes in regards to the Starbucks logo, they would most likely fail to notice much difference between the old logo of Starbucks and the new logo. That is because there virtually is no difference between the two as can be seen from the above image of two logos from a different time period. The only distinguishable feature would be the lack of words on the newer logo which was previously written as "Starbucks Coffee". The change was made to make the logo take all the viewing space or in other words to appear sleeker and attractive to the viewer's eye and not necessarily appear as an advertisement. At the same time, Starbucks had grown into so many foreign markets that its menu included not just coffee but many forms of breakfasts and lunches too which widened its men list which previously only specialised in coffee making. Thus these changes were made keeping in mind the future of the company and its brand visibility.
To better adapt to the local culture and to attract more customers from the location of the country any international country also needs to reimagine or redesign the general atmosphere of their outlets. Having a more cultural outlook in the eyes of the customer of the nation can certainly help boost the customer or the consumer base of the outlet and help the organisation like Starbucks which thrives on a better user and customer experience propel its way forward to economic domination of this particular sector. As such redesigning the general look and feel of the outlet can certainly help the company hold firm on its ground in foreign nations.
No brand can be formed without the help of a marketing strategy. In fact brand presence or how powerful the brand is often times judged by the marketing campaigns the brand undertakes and how exactly it turns out. Starbucks too has a marketing strategy in place in order to further strengthen their brand image and also to rope in more customers to its outlets. The first strategy in a marketing campaign is to allocate lots of funds to it and also to employ various techniques and methods of advertising to increase the visibility of their brand.
With repeated advertisements regarding their brand the company can subconsciously create certain levels of goodwill in the mind of the consumers. The target audience of Starbucks which are the upper class working individuals then visit the outlet to avail the services and are also very much satisfied by it, hence they have a positive impression of the outlet and would not hesitate to go there again if they want to taste good quality coffee again.
Starbucks and all its outlets also employ various forms of marketing mix to attract more customers and to generate more revenue. marketing mix refers to the factors or the steps which an organisation can employ to better control their business and influence customers to purchase their product or avail their service. Starbucks employ the marketing mix which is known as 4P’s in their marketing mix to benefit themselves. these are- Product, Price, Promotion and Placement. product refers to better quality of products and services which can be provided by the outlet to the targeted customer which will make the customer happy. Price refers to the price level of the product which the customer will have to pay to obtain that particular product or service. The price level can help in deciding the targeted customer. Promotion refers to the placement of ads and having channels of communication through which the company can promote their product directly to the customers. Lastly, place refers to having setup of an attractive store or an outlet through which customer can directly approach Starbucks for their product.
Starbucks is already a multibillion dollar company. It has expanded its operations in multiple countries and has grown to expand among many different countries and continents (Ferreira 2018). The plan forward for Starbucks would be to expand further into developing countries to increase its base of operations and also to reap advantages of the high rate of growth which these countries can provide as they have not reached their pinnacle unlike other developed countries. As such these are the major plans of the organisation along with the upliftment of the entire managerial level so as to better serve their customers (Yang 2018).
Initially Starbucks started out as a coffee retailer which used to sell coffee along with tea and certain spices. Since its expansion and also the rise of its chain of outlets in other countries Starbucks has grown immensely to include several different forms of beverages and snacks in its menu which has also grown to include the beverages and snacks from different countries and cultures. For instance, the Starbucks of Malaysia has all the usual assortments of products which are present in its American outlets like Espresso beverage, Chocolate beverages, sparkling beverages and cold brew. The menu also includes foods and dishes like the power lunch, coffee break and rise and shine for the customers (Matiatou 2018).
Just like any other company or organisation to stay relevant and up to date in the market a company like Starbucks too have used rebranding efforts to make themselves more relevant in the field of coffee retailing while also preserving their customers and making sure to attract more customers to their company (Segler 2018). Often times these companies do not give away their market research findings or their rebranding steps which are completely understandable as any company would like to keep all these secrets to itself, but the steps and the strategies which the company has adopted can still be observed by keen mind and on the basis of this an explanation can be brought forth from it.
Similar to any other organisation which are to embark on the journey of rebranding or redesigning it is first important to develop a compelling vision which is easy to interpret and can be easily communicated by the marketers, advertisers and brand managers to the final consumers or the customers. In fact rebranding requires ensuring and protecting the vision which has been set up and making sure that this vision is communicated both to the insiders as well as to the outsiders so that this vision or idea can be adhered to at all times.
The marketing message which has been generated by the marketing team for the company thus needs to communicate strongly to the customer and the consumer so that they can realise the impact of the vision or the new motto which has been setup to change the image or to uplift the image of the organisation (Unnava 2018). The message also needs to powerfully convey the meaning and the benefits of the vision. At the same time the managers have understood that facilitating and rebranding requires removal of obstacles such as the consumer acceptance of the change. Thus it has been observed that without preparing for the expected consumer behaviour or the upcoming challenges it will be difficult to implement any new rebranding change in the organisation.
Thus the challenge for the brand management is to team is to prepare for these challenges and hurdles on their way properly and carefully. At the same time creating or setting up of short-term wins or goals is also important so as to combat the fatigue which employees experience when they have been working on rebranding for quite some time. Similarly to any large chunk of work setting up small checkpoints and divding the large work into smaller portions can help in inducing a more sustained effort.
The Starbucks logo is highly unique and aesthetically pleasing as well along with a great packaging which is generally accompanied in its product. The logo never fails to catch the attention of the onlookers. In fact it is one of the most popular and the most recognized symbol or logo among the coffee lovers. In fact it can also be said that the logo has contributed immensely towards the popularity of the company. The company has the logo of “twin-tailed mermaid” or siren directly derived from the Greek mythology. The logo has remained consistent throughout the history of the organisation (Samoggia 2018).
Since, its inception in 1971 there has been several changes to the product catalogue of Starbucks. In the beginning Starbucks used to occupy one store room in the market area and used to offer tea, coffee and some spices among its range of products.
Since the company specialises in various forms of coffee and beverages it should come as no surprise that the Starbucks outlet serves many forms of Espresso and coffee like whole bean coffee and ground coffee. The menu nowadays also includes several forms of lunch and breakfasts to appeal to a wider audience. Thus the products have evolved quite a bit from the time of its inception or origin.
Since Starbucks initially started out as a tea, coffee and spices outlet it lacked the professional approach to it business or even to its logo. It was only after the hiring of Howard Schultz that the company’s logo was designed and the name Starbucks coffee, tea and spice got changed to Starbucks coffee only. The mermaid logo has not gone any change and has remained constant throughout its history. Their range or catalogue of products too has undergone changes in the past and has grown to include various coffee seeds and breakfast along with lunches too. This has certainly made the brand more popular than others.
In the above table, it can be seen that there are several strength and opportunities for Starbucks. At the same time since no organisation is perfect, the company also has certain weaknesses along with threats which are ever present. The strength of Starbucks lies in its global position as being perceived as the producer of the best coffee in the world.
At the same time the company has immense potential for expansion in developing countries to increase its profit margin and gain a foothold in those countries. But, there are certain threats in regards to the operation of Starbucks. Since Starbucks has a global supply chain, the chain can be easily disrupted due to unforeseen problems. This can lead to disruption service in one region which can cause them some loss. There is a certain weakness too such as the highly fluctuating coffee price can change the price of the products of Starbucks.
PEST stands for Political Economical Social Technological analysis of any company. In regards to the political factors affecting Starbucks few things can be discussed. Starbucks in its expansion has directly come into contact with certain political factors in certain countries, especially in the developing ones. Regional integration is very important to Starbucks so that it can expand its business into other countries. As such it is also important for the company to rope in the national government to develop its infrastructure. This can result in the upliftment of the entire company as a whole in the region. But at the same time, there is the presence of corruption or red tapes in these developing countries.
The Economic factor refers to the economic conditions and the significant economic changes in the countries which can impact the working or certain process of Starbucks. Many developing countries are registering high growth rate which is far beyond what the developed countries can provide to a globally renowned brand like Starbucks. These countries present high economic growth along with the presence of high volumes of physical labour which can be seen as a golden opportunity for expansion for any brand. Thus, it should be noted that these opportunities are there on the mind of the managers of Starbucks. But there is also a problem in regards to labour as the price of the labour is slowly rising in these countries.
The Social factors refer to social trends and societal influences which can impact or even change the consuming habits of the consumers in a particular situation or a place. It has been observed by many industrialists and researchers that the coffee industry is only growing and the recent years have boosted the consumption of coffee due to the fast-paced lifestyle many working individuals lead nowadays. This means that the consumption of coffee is only expected to grow in the near future as more upper middle class and upper-class people have emerged. Since healthy living has also gained momentum it should also be mentioned it would also be better to include certain health conscious products like low sugar coffee on the menu.
Technological factors stand for advancement in technology and the technological trends which can be used in the production of its products or advancements in its offered services. Since many individuals own smart phones these days many also use various apps to order food and drinks. As such, Starbucks can expand into the mobile market by introducing their app through which consumers can directly order things and also track their ordered item. The company can also use the better technology to improve their supply chain management and to increase its efficiency. However, with the rise of coffee machines, the products of Starbucks can be directly challenged.
Porter's five forces were tools devised by Harvard Business School professor Michael Porter which was intended to analyze the attractiveness and profitability of an industry or a company. It was published in the year 1979 and from that time has become pretty popular and successful with regards to business strategy tools (Arslan 2018). There are five forces that are found in the competitive environment which can lead to profit erosion. They are:-
Competitive rivalry includes the number of competitors along with their strength. Starbucks belongs to the coffee retail industry which is perfectly competitive and hence has a large number of competitors which can directly challenge Starbucks at their own game. Since Starbucks aims for the upper middle class of people and the upper class since its products are expensive, its competitors can target the other section of customers and bring them in.
The other power is the supplier power which includes the autonomous strength of the supplier and how easily can they change the price. Any big company like Starbucks are highly dependent on their suppliers to keep supplying them the raw materials otherwise it can disrupt the chain of supply of their outlet.
Buyer power is another factor which includes the power of the buyer and their wish to buy the product, but since Starbucks has established themselves as the best option there is little to worry about in this regard.
The threat of Substitution are the chances of getting replaced in the good books of the consumer by another product but Starbucks has already created a good place in the mind of the consumer in regards to their brand.
The last factor is the emergence of a new entity in the market. Even though there are many players in this particular industry and new outlets of other brands are being opened there is a little challenge to Starbucks as they have established a good sense their name in the entire world (Moon 2018).
The recommendation for Starbucks is to expand further into the developing countries and derive benefit from the high growth rate of these countries like India and Brazil. At the same time it can expand to other countries like Malaysia which has large chunks of international citizens which can prove to be profitable for the company.
It can be concluded that Starbucks is a world leader and known brand in their segment of work. Thus it should come as no surprise that Starbucks is expanding into other countries like Malaysia. Starbucks Malaysia is a project of the company which aims to establish more outlets in Malaysia and also to make the brand more popular in the south East Asia region. This has proven to be a profitable venture for the company.
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