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I need to develop a budget plan and add to slides (Financial Plan ) slide
Outline a high-level financial plan that defines your financial model and pricing assumptions.
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This plan should include expected annual sales and profits for the next three years.
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Use several slides to cover this material appropriately.
Use several slides to cover this material appropriately.
Learning Team A
Marketing Plan
Jennifer Bodine, Shannon James, Tyler Thomas. Sherrell Cook and Teron Brooks
Mission Statement
To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
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Starbucks has developed a reputation of brewing exceptionally delicious coffee. Since Starbucks opened in 1971 (Starbucks, 2013) they have created a coffeehouse atmosphere where people come to drink coffee, talk with friends, perform work meetings, and relax for a few minutes. Starbucks has expanded their operations to 18,000 stores in 62 different countries (Starbucks, 2013). Starbucks created a name for selling world-famous coffee; however, Starbucks has been able to expand their products. In addition to providing several products, Starbucks also offers many services.
Starbucks Sensation
Sugar – free
Will provide mental and physical stimulation
Will be sold in bulk
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This sugar free energy drink from Starbucks will be marketed as providing mental and physical stimulation as the traditional coffees and lattes Starbucks has to offer without the high intake of sugar. Starbucks Sensation can be purchased in both non-carbonated form for juice lovers, and carbonated form for those who enjoy the feeling of drinking a soda. Located in the soft drink isle of a grocery store, Starbucks Sensation comes in different fruity flavors. It also comes in coffee flavors such as vanilla or caramel for the coffee drinkers who want a double shot of energy. Starbucks Sensation is suited for all who wants to gain extra endurance when one is putting in long hours of work or for those working out hard in the gym.
SWOTT Analysis
Strengths
Weaknesses
Opportunities
Threats
Trends
One method that is commonly used and effective for strategizing is the S.W.O.T.T. analysis. First lists one of the business’ focal points as “recharge your afternoon with a lightly caffeinated pick-me-up” (Starbucks, 2013). Second, Starbucks has set up their business as a publicly held company, which means they have the financial resources that other large corporations have. Another advantage is they are not limited in distribution areas. Third, Starbucks has a culture and reputation built around responsible, ethical business practices and building communities in areas where customers do business. From top down, Starbucks is committed to enhancing ethical performance through strategic relationships with global, regional and domestic suppliers (Starbucks 2013).
Marketing Research
Consumer analysis
Demographics
Psychographics
Behaviors
Geographical considerations
A marketing strategy should result in customer satisfaction. The company will use the mission statement as the impetus for the messaging and approach to be used. The customer will be the audience and require two types of messages, both that support the energy drink being safe and healthy. A loyalty program could help accomplish both of these tasks. In particular, Business Dateline states that, “a new online solution by businesses worldwide to create loyalty clubs quickly and affordably, using any standard Internet browser” (Business Dateline, 2009).
Segmentation
Identify your target market
the buyers and consumers
Marketing strategy
factors that affect your marketing strategy
Current competition
Market segmentation is common marketing processes that entail separating a large audience into distinctive segments with consumers who have similar needs or wants. This process identifies targeted marketing segments, so companies can use discretely the marketing mix approach for the most profitable markets. These processes build marketing investments and allow the investments to be more efficient. Detailed criterion is helpful in targeting the finest market segments. According to Reid and Bojanic “there are three segmentation strategies: mass market strategy, differentiated strategy, and concentrated strategy” (2009, p. 143-144).” “Starbucks holds around 33 percent of the market share for coffee in the United States. Starbucks sells almost as much coffee as do fast food and convenience stores combined, even though it the bulk of its consumers are in cities or upscale suburban areas. Starbucks has been able to gain such a large share of the market by catering specifically to a well-defined target audience” (O’Farrell, n.d.).
According to Perreault, Cannon, & McCarthy (2011), the definition of marketing as people or organizations with needs or wants and the ability and willingness to buy, are market segments, which is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. Starbucks uses demographic segmentation (markets by age, gender, income, ethnic background, and family life cycle) as well as geographic segmentation (markets by region of a country or the world, market size, market density, or climate) and psychographic segmentation, which can link with demographics (Cachola, 2012).
Since energy drinks are used for different of reasons (i.e. to boost energy, reduce thirst) they have managed to maintain their popularity during the economic recession. This is helpful with the rapid urbanization that is a result of a fast-paced lifestyle and hectic schedules. This has given new life and an increased need for energy drinks to give instant energy. Also, they help to increase concentration, endurance, alertness and reactions. This is helpful to students or anyone who wants to stimulate and energize mind and body.
Describe the organizational buyers and consumers of your product or service and the factors that influence their purchasing decisions. Discuss how these factors will affect your marketing strategy.
“Starbucks’ primary target market is men and women aged 25 to 40 and they account for almost half (49 percent) of its total business (O’Farrell, n.d.). “Starbucks’ appeal to this consumer age group through hip, contemporary design that is consistent in its advertising and decor, and working to keep its products current as status symbols” (O’Farrell, n.d.). Young adults aged 18 to 24 make up the next biggest consumer group for Starbucks’, and they total 40 percent of Starbucks’ sales. Starbucks targets this age group because this is the college student group and they can hang out at the local Starbucks’ to study, meet people, and write papers. Starbucks appeals to this collage age group through introducing technology as soon as it is available, focusing on social networking, offering free WiFi, and having a trendy image. Children and teens are also a large part of Starbucks’ target audience. Together, customers age 13 to 17 accounts for just 2 percent of Starbucks’ sales, but most items for children are purchased by the parents. Whether the focus is on the steamed milk that Starbucks’ baristas refer to as “babyccinos” or the sugary, caffeinated, whipped cream topped coffee drinks that are so popular with teenagers, kids and teens form a large part of Starbucks business” (O’Farrell, n.d.).
There are several factors that will influence the purchasing decision of Starbucks customers. The availability of the product is one of those deciding factors. Starbucks fears that new products may not be able to meet consumer demands throughout the terms of the contract. The fair pricing on products, which are popular to the Starbucks consumers, is important. Starbucks buyers are relying on the seller to provide fair pricing because they do not want to charge consumers more for the same product. Product quality and the ability to buy on a regular basis without compromising quality influence the purchasing decision, while minimizing the delivery times.
Starbucks’ Primary Target Market:
Men and women aged 25 to 40
Young adults aged 18 to 24
College students
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“Starbucks’ primary target market is men and women aged 25 to 40 and they account for almost half (49 percent) of its total business (O’Farrell, n.d.). “Starbucks’ appeal to this consumer age group through hip, contemporary design that is consistent in its advertising and decor, and working to keep its products current as status symbols” (O’Farrell, n.d.). Young adults aged 18 to 24 make up the next biggest consumer group for Starbucks’, and they total 40 percent of Starbucks’ sales. Starbucks targets this age group because this is the college student group and they can hang out at the local Starbucks’ to study, meet people, and write papers. Starbucks appeals to this collage age group through introducing technology as soon as it is available, focusing on social networking, offering free WiFi, and having a trendy image.
Competition
Red Bull
Rockstar
Monster
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The biggest competitors for the new Starbucks Sensation energy drink are Red Bull, Rockstar and Monster. These three energy drinks hold the majority of the shares in the energy drink market (WordPress.com, 2010). Rockstar energy drink has the most caffeine per serving size of 200mg (CheckMeDaily.com, 2010). Rockstar energy drinks also have the fewest calories of 10. Red Bull energy drinks have the fewest carbohydrates of 28g. Starbucks Sensation already has a quality that the competitors do not have, and that is zero calories in one serving size
Differentiation and positioning
How the new energy drink will differentiate from its competitors
Product positioning
A positioning strategy
Starbucks Sensation can be positioned as the energy drink made exactly the way the customer wants it. Starbucks has done well with positioning their products to stand out from the competition and must do so with the energy drink since there is so much competition in the energy drink market. Starbucks needs to position its energy drink against the competition by offering unique flavors and extra additives that the competition does not, just like they do with their coffee flavors. After the positioning strategy has been determined, Starbucks can then decide on a positioning statement to make the biggest impact on their customers.
Product life cycle
Starbucks Sensation is still in its introduction stage. Starbucks’ market share and sales growth are very small, but the goal is to establish Starbucks place in the energy market. Starbucks’ sales increase by 31% versus the industry average of 15%. Potentially, the energy drink can become the leader of the energy drink industry. Starbucks is the premier roaster and retailer of specialty coffee in the world. Starbucks is creating a niche market that will bring in brand loyalty, and with differentiating from their competitors.
Places to Promote
Social networking sites
Facebook
Twitter
Instagram
In-store locations
Sampling
Coupon on receipt to come back
Grocery store displays
Cardboard displays that draw attention
Coupons
Starbucks will use a promotional strategy that informs their customers of the new energy drink, Sensation. Millions of people use these social networking sites, so Starbucks would reach these people with just a few posts. Grocery store displays help to increase sales and profit .
Promotional Strategies
Push Strategies
In-store sampling
Offer samples of Sensation to customers
Give samples at events
Marathons – give samples to participants
Pull Strategies
E-mails
Send product launch information & coupons to registered customers
Advertisements
Use social networking to entice people to come in
Let customers upload photos of them drinking & giving testimonials.
Starbucks would benefit from using both push and pull strategies to entice customers to try the new energy drink, Sensation. Social networking sites are the best pull strategies to bring customers into a location and in-store sampling would be the best push strategy to entice customers to buy the drink that day. Starbucks has always had success with their marketing and should easily be able to promote the new energy drink, Sensation.
Initial Sales Promotion Schedule
January 2014 – Starbucks will hold its first meeting to introduce the product to the employees and the goals of advertising the new product.
February 2014- The advertising plan and budget will be put into place with the production and advertising team, CEO and the President of the company.
March 2014- The goal during this month is to begin promoting the product on different sites, such as Facebook, Twitter, and Instragram.
April 1, 2014 to June 1, 2014- During the next two months have samples to distribute to Starbucks stores and local grocery stores.
July 1, 2014 to September 30, 2014- Product will be launched into select stores.
October 1, 2014- November 30, 2014- Full production of the Starbucks Sensation will be in effect.
December 1, 2014- An event will be held for the launch of the new product to investors, companies and employee’s of the company.
In December we will have to wait and watch what the sales are.
Advertising Plan
Full Page Ads in popular magazine ads
Celebrities and average Joes
Website that includes a printable discount coupon with access code
Text Message
Gym
College Campus’
Athletic Venue
Advertising Plan
We will place full page ads in popular magazines that caters towards college students and athletes to bring awareness to our product.
Starbucks ads will feature well known celebrities as well as the average Joe.
The ad will include a web address where a discount coupon for Starbucks Sensation can be printed out.
Text Message
When a person pulls into a certain feet of a gym, athletic venue or college, they will instantly receive a coupon for a dollar of Starbuck Sensation energy drink.
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Public Relations
Process of Building Positive Relationships with the Public
Newspaper article
Explanation of Starbucks Sensation product and features
Issue in local and national news outlets
Sponsor Extreme Sport events
Energy drinks are the main sponsors
Open and Honest with the public
Communicate effectively on any issues, complaints or government inquiries
Newspaper article
The article will explain the benefits and features of Starbucks Sensation. It will provide some of the nutritional values and why customers should pick Starbucks Sensation over other energy drinks. It will also mention the zero calories that no other energy drink has.
Starbucks will push to have the article released in local and national news outlets.
Sponsor Extreme Sport events
Energy drinks are the main sponsors of extreme sport events and so Starbucks will have a representative at these events to introduce the new product to this market. Free samples will be given at all events for the first year to help promote the product
Open and Honest with the public
Starbucks will make sure to be honest and forthcoming on any customer issues or complaints and resolve in a timely manner to meet customer’s satisfaction and expectation. Starbucks will also work with the government honestly for any inquiries they might have.
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Channel Management
Organizing marketing techniques to distribute Starbucks Sensation to the most customers at the correct locations and at the correct time
Starbucks Sensation sold through direct and indirect distribution channels
Different flavors sold at different geographical locations
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Channel management will help Starbucks organize the various marketing techniques it will use to get Starbucks Sensation to the customers.
Channel management helped Starbucks identify that it will sell Starbucks Sensation through both direct and indirect distribution channels
Direct channels – Starbucks locations and Starbucks’ website
Indirect channels – grocery and convenience stores
Channel management helped Starbucks decide which flavors would be sold in which geographical area
Studies will be conducted on which flavors are sold the most at different locations, and then stock these locations with more of these flavors and remove the flavors that don’t sell well
Distribution
Starbucks will coordinate distribution through the Supply Chain Department
Monitor inventory levels and coordinate shipping schedules
Trucks will be used to ship inventory to distribution centers and selling locations
Most cost efficient method for geographical area
Just-in-time (JIT) delivery system
Cut down on storage costs
Quicker arrival of inventory
Supply Chain
The Supply Chain department in Starbucks will be important in the successful distribution of Starbucks Sensation
They will monitor the inventory levels to avoid stock outs
Coordinate the shipping of trucks to only spend money on shipping when needed
Trucks
Starbucks will only be sold in the Western United States for the launch so trucks are the most cost efficient at this time. This will be reviewed if the product expands into other areas and markets.
Just-in-time (JIT)
Starbucks will use JIT delivery system
This will allow Starbucks to not spend much on storing costs
It will allow each selling locations to have a stable amount of inventory and not have excess amounts of inventory that don’t get sold
Inventory will arrive when each selling location needs it
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Financial Plan
Outline a high-level financial plan that defines your financial model and pricing assumptions.
This plan should include expected annual sales and profits for the next three years.
Use several slides to cover this material appropriately.
Elements for Monitoring, Evaluate and Control
Access codes
Use of coupons
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When potential buyers visit the website that is located on the advertisement page, we will be able to monitor how effective the advertisement is by tracking the access codes used to print the discount coupon.
We will also be able to monitor and track how many coupons were used to purchase Starbucks Sensation energy drink.
Conclusion
Starbucks products will continue to grow because the company has taken the necessary steps to launch their products successfully by creating and marketing the products correctly.
References
Business Dateline (2009). Restaurants, Coffee Shops and Other Food Retailers Can now create professional loyalty clubs affordable online: New service allows small businesses to benefit from marketing practices once reserved only for the largest players. Business Dateline. Retrieved August 20 ,2013
Vass, K. (2005, April) A Solid Marketing Plan Begins with SWOT. Textile World. Pg. 18.Retrieved August 23 ,2913 from Pro Quest database.
O’Farrell, R. (n.d.). Who is Starbucks’ Target Audience? Retrieved from http://smallbusiness.chron.com/starbucks-target-audience-10553.html
Perreault, W. D., Cannon, J. P., & McCarthy, E. J., Jr. (2011). Basic marketing: A marketing strategy planning approach (18th ed.). New York, NY: McGraw-Hill.
Reid, R.D. and Bojanic, D.C. 2009. Hospitality Marketing Management. 5th ed. s. l.: John Wiley
Starbucks Pricing Strategy | Chron.com. (n.d.). Retrieved September 6, 2013, from http://smallbusiness.chron.com/starbucks-pricing-strategy-10544.html
Starbucks to jolt consumers with Refreshers energy drink USA TODAY.com. (n.d.). Retrieved September 6,2013 from http://usatoday30.usatoday.com/money/industries/food/story/2012-03-21/starbucks-energy-drink-refreshers-red-bull/53693616/1
