Friday, September 7, 2012

Chapter 2: Strategic Planning for Competitive Advantage

The community at a Starbucks coffee shop
In order for a company to grow and maintain a successful business, a standard has to be made to live out the mission of that company and keep their consumers satisfied. There must be a strategic plan made, which consists of the managers creating and sticking to a particular structure between the organization's objectives and resources as well as the changing market opportunities. This plan will be set for the company to sustain its business and it must include ways to have an advantage against its competitors.

As stated in part of their full mission statement, the people of Starbucks are more focused on the customer being able to go to a Starbucks whenever necessary and feel like it is a natural part of the daily routine, which for many it has become.  Starbucks is also concerned about the quality of their coffee, their partners, their customers (as stated previously), their stores, the neighborhood, and their shareholders.  This is the first step of establishing a strategic marketing plan: by creating a mission statement, which the rest of the plan should follow through and achieve the goals of the company.

Now, because no company is perfect and nothing is ever just in plain black or white, marketers must prepare the situation analysis, or what's referred to as the SWOT analysis, in order for the business to strive.  In doing this, the people in charge of this area of the company, must point out the Strengths, Weaknesses, Opportunities, and Threats.  Starbucks' has many strengths, and the major important ones are listed: 
~ product diversification
~ established logo, developed brand, copyrights, trademarks, website, and patents
~ company operated retail stores, international stores (no franchise)
~ valued and motivated employees, good work environment
~ good relationship with suppliers
~ industry market leader
~ customer base loyalty
~ widespread and consistent
~ knowledge based
~ strong board
~ strong financial foundation

With strengths comes weaknesses because again, no one and nothing is ever perfect.  Here are some of Starbucks' weaknesses:
~ size
~ lack of internal focus (too much focus on expansion)
~ ever increasing number of competitors in a growing market
~ self cannibalization (refers to a situation where a new product "eat" up the sales and demand of an existing product)
~ cross functional management
~ cleanliness
~ product pricing (expensive)

Following this pattern of the SWOT analysis, Starbucks has a list of opportunities and threats to consider as well.  A main opportunity Starbucks has is the expansion into retail operations such as department stores (Macy's, Bloomingdale's, etc.) and creation of new products.  A major threat against the Starbucks company are its competitors, such as Dunkin' Donuts, McDonald's McCaf√©, and even street carts.  One way Starbucks is different from its competitors though, and other major companies in general, is by not having a great deal of advertisements on billboards, in newspapers, or even posters in places where you would expect to see advertisements.  This is a part of their marketing strategy, or should I say an uncommon marketing strategy.  Most of Starbucks' advertising is by word of mouth, which has worked with the company seeing how rapidly the business has grown.  This is all included in the marketing mix (sub category of promotion) of the latter part of the marketing plan.

After the SWOT analysis, or situation, is defined, the objectives have to be listed.  This goes back to the the mission of the particular company and how to work through those objectives in establishing a target marketing strategy.  Within the marketing strategy is the marketing mix (product, place/distribution, promotion, and price).  After all of these areas are covered, the business can begin implementing the plan and get ready for evaluation and control.  Once a business begins working though the marketing plan, they can sense that even though there are steps to follow, areas will intertwine and link with one another.

With creating a thorough SWOT analysis, Starbucks is able to have a sustainable competitive advantage, which is an advantage that cannot be copied by the competitor.  Starbucks' ideals and sense of responsibility is a big part of the consumer value it delivers.  As they continue this and find new ways to add to this emotional value associated with their brand, it increases their sustainable competitive advantage.  Lastly, even though other coffee producers and retailers may be able to match the quality of Starbucks' roast, it will be difficult to match the brand in which Starbucks has created.  The intangible value is what creates their brand loyalty.

Source regarding SWOT Analysis

Definition of Market Cannibalization

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