case study Starbucks

Topics: Marketing, Coffee, Brand Pages: 11 (3534 words) Published: October 15, 2013

Table of Contents
Table of Contents2
Starbucks and Marketing environment4
Conclusion and Recommendation:7
Starbucks and Market Segmentation7
Conclusion and Recommendations:8
Branding and Starbucks9
Brand Association:9
Celebrity Endorsement:10
Conclusion and Recommendations:10
Role of the brand and extended marketing mix11
Physical Evidence:12
Conclusion and Recommendations:13

Starbucks was founded by three atypical businessmen, Gorden Bowker, Jerry Baldwin, and Zev Siegl in 1971 at Seattle’s Plike Place Market, Washington, United States of America. Starbucks’ mission is to “inspire and nurture the human spirit- one person, one cup and one neighbourhood at a time”. Starbucks operates about 17,000 stores in more than 50 countries in the world ( Starbucks purchases and roasts high quality whole bean coffees from different coffee growing nations and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of pastries and confections, and coffee related accessories, mugs, packaged goods, music, books and equipment through its company operated retail stores. Starbucks also offers premium innovative teas by its owned subsidiary, Tazo Tea Company. The Company’s objective is “to establish Starbucks as the most recognised and respected brand in the world” (Herbeck, D., 2010).

Starbucks and Marketing environment
The main challenges in the marketing environment can be analysed through Political, Economical, Social, and Technological (PEST), PEST is an analysis framework of macro-environmental factors (Peng et al., 2007, p.230). Main challenges which are likely to impact on Starbucks brand in next two years are as follow; Political:

Corporate Tax: Starbucks recently faced a tax evasion and a public protest for not paying an enough amount of corporate tax by avoiding it through loopholes. Starbucks has had sales of 3 billion GBP since starting up a business in the UK 14 years ago. It has paid a total of 8.5 million GBP corporate taxes since 1998 and corporate tax in the UK is currently 25%. Starbucks avoided corporate tax by making number of payments to subsidiaries abroad such as a 4.7% premium is paid to the Dutch division of Starbucks-the regional headquarters- for rights images and the coffee recipes. The company spends 315 million GBP annually on tax deductible areas including research and development. The company also claims the rental rates on its stores in the UK are highest in the world especially in central London (your tax questions answered, 2012). Starbucks also cuts its tax through intra-company loans because the borrower can set any interest paid against taxable income, and the creditor can be based in a place that does not tax interest. An examination of Starbucks account reveals that whole UK unit is entirely funded by debt, and paid 2 million GBP interest to group companies last year (How Starbucks avoids UK taxes, 2012). Starbucks biggest rival in UK- Costa coffee sale increased 22% and YouGov surveyed that 15% of people in UK would prefer Starbucks whereas 39.4% said they would prefer Costa. Starbucks sale dropped to 15% from 22% immediately after Starbucks boycotting (Bowers, S., 2013). Starbucks’ market share may drop further if company does not initiate appropriate measures to protect customer loyalty. Next election is due in 2015; change in government may bring new legislation which may impose new tax policies. Political influence can affect the business significantly. Economical:

Starbucks sale fall down significantly during economic downturn in...

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