Jennifer Nguyen
MK255 Principles of Marketing
6 November 2009
Starbucks SWOT & Marketing Plan
SWOT Analysis
Strengths:
 Founders of premium coffee (superior quality, therefore higher price)
o They only use 100% natural roasted Arabica beans
o Even their Via instant ready brew coffee is a premium player. Starbucks created a
microground coffee that maintains the rich and aromatic flavor of premium coffee
beans. Via is portable coffee that doesn’t sacrifice quality. Via is also for the value
customers who can’t or won’t splurge on a regular coffee purchase. Via provides a
quality cup of coffee for less than a dollar.
o March of 2008, CEO Schultz announced the acquisition of Clover machines to
Starbucks. The machine is a technological hybrid of a French press and vacuum. The
Clover is the first coffeemaker that lets the user program three key variables: dose,
water temperature, and brew time.
 Created the “Starbucks Experience”
o The experience is not simply provided by their premium coffee. Starbucks isn’t in the
coffee business serving people rather they are in the people business serving coffee.
o Their mission statement works towards bringing a Starbucks experience to all
 Mission Statement: “To inspire and nurture the human spirit— one person,
one cup, and one neighbourhood at a time. ”
• By striving for a higher quality of life for all persons, Starbucks is
strategically brand positioning themselves on strong beliefs and values
o Starbucks creates an appeal to a diverse range of individuals
 Appealing to non-coffee drinkers: Frappaccino
 Appealing to home coffee brewers: Starbucks has a co-branding deal with
Kraft to bring its coffee into supermarkets. (Starbucks roasts and packages the
coffee and Kraft markets and distributes it.)
 Appealing to the charitable: Fair Trade products (Develop sustainability by
better trading conditions and securing rights for workers); Ethos Water
(Helping children get clean water); Product Red (HIV/AIDS awareness)
 Appealing to new geographical markets: Store expansion into new U.S
markets (smaller cities) and new global markers
o Created the idea of a “Third place”
 For everyone to go between home and work. Providing more than 15,000
stores in over 40 countries.
 Extra in store products and features:
• Wi-Fi accessible, lounging environment (chairs, lighting, music),
lunch and dinner items added to the menu, available in store (gourmet
coffee, tea, gifts and related goods)
 Excel in product development (new products for current market)
o New products

Partnered with PepsiCo to bring bottled Frappaccino and DoubleShot
Expresso drinks
 Partnered with Dreyer’s to bring Starbucks coffee flavored ice cream
 Partnered with Hershey’s to bring Starbucks chocolate
 Starbucks Liqueurs
o Starbucks Entertainment
 Hear Music record label
• XM Satellite Radio
 Partnered with Lion’s Gates to co-produce movies and market them in
Starbucks (EG. Akeelah and The Bee)
o Media Bars
 Allow customers to download music and burn CD’s in select stores
Weaknesses:
• Pricing
o The premium category is under attack with the conditions of the economy. This
once affordable luxury is no longer available to the average working class. Only
the elite class can afford to spend approximately $500 annually on five times a
week purchases of a Venti brewed coffee.
o The high pricing is limiting the brand to elitists (Upper middle class white
demographic)
• Promotion
o Starbucks relies too heavily on word of mouth marketing
 This can further isolate Starbucks as an elitist drink if the non-regular
customer is unaware of Starbucks and doesn’t give it a chance
Opportunities:
• Boston provides Starbucks with the opportunity of a demographic that has not been
targeted on a large scale-college students!
o Right in Boston alone, there are 25 prominent colleges and universities
o Starbucks has the opportunity to carve out its own section of market share
provided by students and young professionals in the metro area
Threats:
• McCafé (“Premium player”)
o Owned by McDonalds. First one was launched in Melbourne, Australia in 1993.
There are currently 1,300 worldwide.
o Product Positioning
 “McCafé Your Day: Give it up for the accent mark”
• Plays off the name. An awareness campaign. Ad’s feature different
experiences that is more pleasurable when the accent is added.
(EG. Choré, Parté)
o Value Proposition
 The same for less
• McDonalds’ drinks are almost $1 cheaper than Starbucks’
• McDonald’s strategy of opening McCafé’s in existing franchises
saves them money. It cost at least triple the amount of money to
invest in one Starbucks what it cost for a McCafé.
o Aggressive marketing

•
McCafé billboards take jabs at Starbucks
• “Four bucks is dumb”
o Gains an advantage by attacking Starbucks high prices and
then providing a “Same for Less” value proposition
• “Large is the new grande”
o Gains an advantage by attacking the pretentiousness of
Starbucks while assuming the position of a widely
recognized brand -McDonald’s
Dunkin Donuts
o Bill Rosenberg founded the first store in Quincy, Massachusetts in 1950. He
began franchising the name throughout the Midwest and Southeast.
o Product Positioning:
 “America Runs on Dunkin”
• Creates this appeal of a quick and convenient service
• Going after the average Joe
• Target customers are usually middle-income blue and white
collared workers.
• Dunkin Donut customers want to be part of the crowd unlike
Starbucks customers who want to stand out as individuals
 Specifically, Dunkin Donuts is a threat to Starbucks in the Boston Area.
Dunkin Donuts is a prominent East Coast coffee that has created a strong
brand loyalty.
Marketing Plan Objectives
Explaining/outlining goals:
 Goal: To Capture Market Share from Dunkin Donuts and McCafé
o Problems
 In order to capture market share from Dunkin Donuts, Starbucks
would have to position itself as coffee for the everyday Joe
• This move would be a brand killer. By making Starbucks
friendlier to the “average Joes,” (customers who want to be
part of a crowd) Starbucks would be devaluing their premium
status. Dunkin Donuts and Starbucks are positioned in two
completely different markets. Dunkin donuts is a commodity
player. They do not provide high quality coffee and they
operate in low scale environments. Starbucks on the other hand
operates in high scale environments, provides premium coffee
and quality customer service. The overall problem with this
scenario is that you cannot combine Dunkin Donuts customers
and Starbucks customers without alienating one or the other.
 In order to capture marker share from McCafé, Starbucks would have
to provide lower prices. McCafé’s greatest advantage on Starbucks is
that it provides premium (Newman’s Own) coffee at a significantly
lower price.
• This move is also a brand killer because Starbucks customer
want to stand out from the crowd. They view themselves as
loyal customers who understand the value of paying a higher
price for better coffee. Starbucks would alienate these
customers if their prices were synonymous with a low-end
brand such as McDonalds. Also, Starbucks does not want to
reposition itself into the thin profit margins of the commodity
players.

o Solution
 Starbucks needs to target a specific niche of the McDonalds and
Dunkin Donuts market. Then Starbucks needs to market to this niche
in a way that will get them to try the brand. Finally Starbucks can use
its strongest asset-its premium status/quality-to gain customer loyalty.
Main Objective:
o Target College students and use promotional discounts to capture the markets
attention. The only obstacle here is getting students to give Starbucks a try.
Execution
Action Programs:
 Run a promotion where one day of the week every student that comes in with a
college I.D receives a percentage off any drink in the store.
o Starbucks is saying that they are doing something specifically for students.
And by catering to the college community, Starbucks is building a relationship
with students.
 Through the print medium run ads specialized for college students. There are two key
locations.
o The T
 The T is a central cornerstone of just about every college students’ life
here in Boston. Students will be made aware of Starbucks presence.
 Students will relate to Starbucks. Ads should feature college students
and establish an emotional connection with students by concentrating
on their wants and promoting their values.
• A specific ad that should be made for The T is one that
promotes the idea of Starbucks as a “third place,” between
college students’ dorm rooms and classrooms. No longer is will
this “third place,” be reserved solely for the professional world
to go to between “home and work.” Students want a hangout
or an extra library/office and they value space.
o College and University newspapers
 College students specifically read college newspapers.
 Starbucks will advertise the promotional day where every student that
comes in with a college I.D receives a percentage off any drink in the
store. The advertisements in The T are to target college students and
expose them to Starbucks, where as the advertisements in the school
newspapers are signaling a call to action through a discount tactic.
Follow up and Closing
Starbucks does not need to reinvent itself. The real objective was to get students interested
enough in Starbucks to give it a try. Starbucks can then follow through on capturing customer
loyalty by providing students with the same premium coffee, quality customer service and up
scale environment that they have been providing since day one. Once students are exposed,
the hope is they will make Starbucks their “third place,” between their dorm rooms and their
classrooms, spread Starbucks’ by word of mouth and come back for more every time.