Starbucks Coffee Craft Beers Sample Assignment

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Part 1

Introduction:

Starbucks is the leading coffee shop within the industry and holds almost a majority of the market. The company has learned how to maintain its competitive edge of competitors like Dunkin’ Brands and McDonald’s McCafe. In attempts to continue growing within the market Starbucks will be releasing a new line of products for adults only. Starbucks has maintained the competitive advantage by being the leader in product innovation (Speculations, 2016). The company will be looking to pair with microbreweries within a relatively local distance of roughly 5 miles from store front to create new coffee stouts that will intrigued all different people and backgrounds.

With the growing interest in microbrewery beer Starbucks will be releasing their coffee stouts and porters to the lovers of craft beers. Today’s craft beer lovers include: millennials, women and Hispanics. So how is Starbucks going to market to these different audiences a coffee stout that pleases all taste buds? As millennials we continue to account for a majority of craft beer drinkers and are followed by Generation X (Herz, 2016). With nearly 2,592 unique craft beers being sold, a variety of these choices specifically target the millennial generation. Mintel’s 2013 report on craft beer drinkers showed that consumers were between the ages of 25-34 years old (Fromm, 2014).

Millennials like to support up and coming businesses like craft beer microbreweries because we feel as if we can make a different in our life span. With an average market growth rate of 9.3% per year, Millennials have the confidence that these craft beers with sustain their loyalty (Fromm, 2014). It’s been proven that millennials love beer and it’s a reason as to why they’re choosing craft beers over leading brands like Bud Light or Coors (Fromm, 2014). Taste, variety and experimentation with seasonal and local choices all help boost annual revenues. As millennials, we know what we want and we know what options we can explore for tastes to appeal to every taste bud.

To promote such a product to millennials, women, and the Hispanic population, Starbucks will need to pick channels that reach to all individuals. These channels will include but are not limited to social media platforms, television, and even radio. With consistent advertising comes a consistent look. Today Starbucks is known for its iconic logo and intends to keep the same logo and color scheme for the craft beers and coffee stouts that will be sold on store fronts and served at adult nights. Each brew will be different to appeal to different customers. Beers will range from blonde (similar to an IPA) brews with little hops to a dark stout which will be for the espresso drinkers.

Consistency to customers is everything. Andrew Stanten, the president of Altitude Marketing states that “make sure your visual identity is consistent, because visual identity is far more than a logo” (Schiff, 2014). Messages being sent across various social media platforms will need to remain consistent in order to draw in millennials, and women for that matter. Visual connections from consumer to website of even face to face connections will draw in more business for Starbucks new release of coffee stouts and porters. Instagram is a great social media platform that Starbucks could employ to send messages to its target audience of Millennials and allow for them to share their experiences. With Instagram’s newest features consumers of the Starbucks Craft Coffee Beers can share their social interactions with the product either on their story where friends can see it for up to 24 hours, or go live and share a video with any and all followers of what they are doing at that time. Another social media platform that would be good for Starbucks to focus on with such a young target market is either Facebook or Snap Chat. Each of these social media sites is very interactive and allows for the sharing of pictures, text and live videos as well. Since the lifespan of a snapchat is so short, it makes it the perfect tool to deliver a call to action and automatically creates excitement amongst the targeted audiences.

A big step in the release of a new product line for Starbucks is to ensure that all their marketing materials and messages are integrated. The purpose of messages that are delivered to customers is to set up and drive traffic to the company’s ultimate target audience (Schiff, 2014). To increase the sales of coffee stouts and porters for Starbucks not just in stores but online as well the company will need to include links to their websites on social media posts where consumers can easily have access to their new favorite product. As with any new release of a product no matter the size of a company, the campaigns and promotional discounts that apply are critical to the success. Dylan Whitman, the cofounder of Brand Value Accelerator stated, “Specifically, those company’s looking to use digital to drive in-stores sales should have a corresponding campaign that segments how well the product is performing to get a good understanding of ROI” (Schiff, 2014). Starbucks will be using a marketing campaign along with various online social media platforms in order to drive sales and push a new product on a target market that is looking for new variety of flavors.

Positioning Strategies

Introducing new products to existing markets can be a difficult task along with introducing new products to new markets. For Starbucks, there is a set market of coffee drinkers who are all within one particular age range: millennials. They love the ambiance of the coffee shops, the music, and have a tendency to be more experimental with flavors and tastes. For companies comes the task of developing and implementing new strategies in order to make the new product more appealing to new audiences. The strategies that Starbucks will design and implement for the new craft brew is the blueprint to beating their competition within the craft beer industry.

In order for Starbucks to brew craft beers and introduce them to the millennial market in a new fashion, the company needs to generate demand before trying to beat out competition. Even though there is an establish market of coffee drinkers in Starbuck’s world, there is a whole new market that will need to be established in the craft beer world. By generating demand before trying to beat out competition is not an unheard of strategy for new products. This strategy will allow for Starbucks to gain inertia in the millennial market and create a craft brew with flavors of coffee that is appeal to any taste bud. With the release of new craft beers Starbucks should look to do a slow role out for this product and have nights in house for the millennial generation to try and give feedback on their thoughts on taste, presentation, and overall feedback. By doing a slow release this will allow Starbucks to fix any kinks that were shown during the “test” phase of the release and make appropriate adjustments to gain inertia. Once the company has gained traction on the new product with the target audience they can begin to branch out to more stores and not just the coffee house which makes Starbucks begin to grab more market share within the craft beer industry.

Second strategy that needs to be blueprinted and implemented for the release of the new product is to time the entry into the market rather than make a sudden more towards limited opportunity. Each strategy goes hand in hand for Starbucks that way it eliminates and chance of failure. New markets can be tough especially with new products because they are littered with companies who are worried about “coming in first” (Wunker, 2011). Product launches are typically a make-or-break moment for a company and with early entry Starbucks wouldn’t be optimizing on revenues and profits (Kokemuller, n.d).

The timing of the launch for Starbucks craft beer would more than likely affect the quality of the product that the company is offering. If Starbucks introduced the beer to the millennial market to early the taste wouldn’t be as flavorful as hoped and the brewing process would not be completed leaving it to taste bitter. With a bad kick start to a new product in such a picky audience there would be no way that Starbucks craft beers would make it.

Next strategy for Starbucks to explore would be to use pricing as a position strategy in a market of millennial buyers and consumers. The question for Starbuck is – quality approach or position by price quality? If consumers perceive that the craft coffee beers are of the highest quality then they will be willing to pay more for the product instead of a low grade beer like Bud Light (Bhasin, 2016). The price of this product will depend on the demand. The higher the demand, the more Starbucks can charge since brewing coffee beers and stouts is a long and time consuming process with several steps. By charging more for the product, the company will be able to break even on all expenses while still churning a profit. Brand perception is key in the pricing strategy that Starbucks will be employing for the craft beer since millennials are willing to pay more for a product that they perceive to be top of the line.

Finally, the last strategy that Starbucks will be looking to implement with the release of the coffee craft beers is distribution. Distribution can be a tricky scenario for Starbucks since they will be looking to feature the new craft beers in stores and liquor and wine outlets and not just the coffee house. Where Starbucks sells the beer will say much more about the quality of the product (Ashe-Edmunds, n.d). Millennials tend to be more drawn to a liquor and wine outlet because there is “more choice” compared to going to Walmart where there is just beer. Since Liquor and Wine outlets don’t necessarily focus on beers this would be a great place for Starbucks to try and get their product into in attempts to differentiate themselves from the competition. Specialty stores will be a great opportunity for distribution channels for Starbucks along with stores such as Target where the public would be able to see a top of the line product amongst other average beers. If the consumer base is well established, then Starbucks will have no problem finding different channels of distribution for the coffee beers other than just in shop adult nights where beer tastings can be done along with purchases.

Of course there are potential problems that could inhibit a successful product for Starbucks in each position strategy, however the benefits outweigh the risk. The largest risk that Starbucks could run into would be the timing issue. If the product is released to the public to soon before a test phase and the overall feedback is negative, this could hurt the chances of Starbuck releasing a product that is well perceived by the market. Test phases are a great way for the target audience to try the product to see what their thoughts are, go back and make changes according to feedback and then revealed the product to the entire market. Marketing research and marketing strategies are the two largest components in releasing a successful product to the millennial generation. Along with the timing strategy, the pricing strategy might be another issue that could harm Starbucks from having a successful product. Pricing is sensitive for a millennial market, however if the product is top of the line then the older generation millennials will be willing to purchase the product due to having the disposable income. Top of the line products deserve top price for the product, however with a craft beer that is starting out the demand for the product isn’t going to be there meaning that prices will have to start lower and as a consumer base grows so can the price. Naturally with no risk comes no reward, but Starbuck has outlined several different strategies that will help the coffee craft beers stand out within the industry and within a tough segment of the market: millennials.

Overall there is a preferred positioning strategy for the release of craft beers designed by Starbucks and that is to make sure that each strategy is blueprinted and implemented fully for a successful product. By blueprinting the strategies this allows for Starbucks to make changes as unexpected hurdles come or even begin planning for those hurdles as a “just in case”. New markets are always tough to break into which is why blueprinting the strategies out gives Starbucks a competitive advantage to make sure that their product is now successful.

Mediums

In a society that is dependent on social media and technology there are so many different platforms used as forms of communications. Social media has required marketing managers to adopt new strategies and think outside the box while rethinking their integrated marketing communication strategies. While social media has its advantages and of course its disadvantages, the one key takeaway from using social media in a technological market is that it allows for a company such as Starbucks to expand their target audience and marketing research techniques (SHRM, 2012).

With Starbucks being a hip coffee shop in a competitive industry, the company can use social media to improve communication standards along with productivity. In order to improve productivity, it’s about learning from all the employees and consumers and sharing what works for the particular product and what doesn’t work. For Starbucks releasing a new product such as the coffee nitro brew beers would be a great opportunity for the company to utilize Facebook, Twitter, and Instagram to its fullest potential. A big disadvantage of using social media platforms for a company like Starbucks is that senior executives who might be of older age will not understand how to effectively and efficiently use social media to build a brand resulting in hiring a team of young professionals. The best way to engage with millennials or the selected target market is through social media especially Instagram and Twitter. Social media platforms such as Twitter and Instagram are perfect for the launch of the new Starbucks product but 69% of millennials check their Instagram at home, 53% on vacation, and 47% while watching TV (Clasen, 2015). With just those simple statistics its evident that certain social media platforms like Twitter and Instagram will be proven beneficial for the release of a new Starbucks product.

With more than 30 billion pictures shared on Instagram, Starbucks can utilize their organization account to share the story of how the craft nitro brew coffee beer is made. With this personal selling over a social media platform, this will make the consumers feel as if they are a part of the company which in turn leads to increased brand loyalty. Statistics show that millennials love the power of visual storytelling, but they also have the strength of the community of followers (Clasen, 2015).

Another form of communication that Starbucks will need to utilize in the release of their new craft beer is personal selling. Personal selling is vital since it gives the company a chance to increase revenues from customers. When employees build relationships with consumers there is almost an unwritten law of agreeance and consumers will pay higher prices because of the service (Lawrmore, n.d). For Starbuck and the release of the new product, personal selling should be easy especially if it’s a millennial selling to another millennial. Most people always make the mistake of thinking that “personal selling” is just talking to a customer. With that it’s about more than just talking, it’s about building that relationship, understanding the wants and needs of the consumer and not just thinking about the money in their wallet. As of today, Starbucks employees do a good job of going the extra mile to genuinely care about the wants and needs of the consumer, so personal selling should not be an issue for the staff.

Finally, one last medium of communication that Starbucks should look into other than just social media, personal selling, and personal interaction is television. While social media may be consuming most of the attention television is still a great way to reach out to the other portion of the millennial generation. Isaac Weber the VP of strategy at MarketShare stated that “TV is a giant megaphone, when you want to get the message out there, TV is still the most powerful means to do so” (Lynch, 2015). While there is competition with Netflix, Starbucks can utilize commercial campaigns that can be found on channels such as Hulu who has frequent commercials while streaming shows. By focusing on KPI’s like sales, Starbucks would easily be able to optimize their budgets and increase annual revenues providing the message is to the point and effective.

Overall, the best medium of communication that Starbucks can use in the release of the new product is social media. Since the company is focusing on the millennial generation, Twitter and Instagram would allow for consumers to see how the product is created along with making them feel as if they are a part of the company. With social media as well if there are ever any complaints (which there will be of course) the organization can hop right onto their social media account and get a real time answer instead of waiting hours on end with no response. By focusing a majority of the budget on social media campaigns for the craft coffee beers, Starbucks will be able to effectively reach their target audience and begin expanding into other markets as well.

Global Strategy

Branding and marketing globally is much more than just a logo or a color for a product, it’s about consistent communication with the market. Since Starbucks is located globally in 26 different countries it needs more room to grow in areas that are up and coming. Two markets in which a coffee beer created by Starbucks would succeed in would be Italy and Cuba. A global marketing approach doesn’t mean an absence of local, market-specific plans and initiatives, it means the opposite (Griffith, n.d).

To start, Starbucks would be releasing its new product in Cuba which at first is an interesting choice since the US just repaired all relations. Cuba has been growing coffee beans for more than two centuries and has been named the strongest coffee tastes that a consumer can find (Espresso Coffee Guide, n.d). Traditional Cuban coffee is dark roasted, finely grounded, and is typically an espresso style coffee. Since the country cultivates its own coffee beans production of an espresso stout will be fresh and a top of the line product released by Starbucks. To successfully strive in a culture such as Cuba’s Starbucks needs to understand the local market and develop a collaborative approach to the consumers. In the wake of President Obama reinstating relations with Cuba, there has been a technology scene present. While typical grassroots marketing has been proven the most successful marketing strategy, with technology Starbucks can reach out to all consumers in Cuba. However, in order to reach consumers in Cuba and to be successful, Starbucks new product will need to be priced on the low side since the average Cuban earns $20-$30 a month (Kolarich, 2016).

In developing countries such as Cuba, Starbucks needs to remain price sensitive and hire locals to work in new store fronts in the country. The approach that Starbucks will take in Cuba is far different than that of the United States. The US is well advanced in technology and can afford higher priced goods unlike Cuba. Since, Cuba and the United States have been at different ends of the political spectrum since the 60’s Starbucks will need to do a slow release of the craft coffee beers to make sure its takes within the culture and will succeed.

The second country in which Starbucks should release a coffee craft beer into is Italy. Italy is a lot like the United States, where it thrives of tourism and food. Like the US, the Italian economy is based on imports, tourism and archaeological heritage. If Starbucks went into Italy and released a coffee craft beer rates would be inflated and would increase profit margins. In 2015, Italy’s foreign visitors spent nearly 36 billion euros (Farnesina, n.d). There are a lot of key similarities between the United States and Italy. Both countries are big on imported and exported goods and rely heavily on their tourism to boost the economy in times of economic downfalls. With signs and hopes of the Italian culture and economy booming in the years to come, introducing the coffee stouts to the culture would be a smart business choice on behalf of Starbucks.

Much like the United States, Italy relies on technology and social media. If Starbucks implemented a social media campaign using Twitter and Instagram, tourist and even natives of Italy would utilize the social media platforms. Instagram allows for people to tell a story, and by focusing on an Instagram campaign people from all over the world would be able to share their stories with Starbucks about experiences with the craft beers. As for Twitter, Starbucks would be able to get live feedback on their product and get a general idea of what it is customers are looking for. Since Italy is such a technology and tourist country, Starbucks would have to implement a premium pricing strategy to increase profit margins and offer a superior product. Italians have sophisticated tastes along with American’s who drink craft beers. By introducing the coffee beers into Italy is smart since they have sophisticated tastes, are willing to spend more money on products, and love their technology.

Overall, strategies that will be used as guidelines for global communication with Starbucks will include social media marketing, and price sensitivity marketing. The release of the product in Italy will result in a focus on social media marketing since the country relies heavily on social media and technology like the United States. Social media marketing will need to be direct and will need to allow consumers to share their stories with the product, thoughts, and general feedback. For countries like Cuba, a release of coffee beers needs to be introduced slowly and needs to be priced accordingly. Since the country doesn’t have a lot of money, Starbucks would be able to open hundreds of new jobs by releasing a coffee craft beer to the market. By opening jobs, the economy in Cuba would stabilize and would allow for consumers to spend more money on products released by Starbucks.

Conclusion

For Starbucks to break into such an upcoming and lucrative market gives the company a chance to gain more market share and increase revenues instead of staying stagnant. With the release of a Coffee Craft Beer the company will employ various mediums of communication to appeal to the millennial generation. Breaking into the craft beer industry is a big move for Starbucks and takes them out of their comfort zone a bit but with a strong coffee stout or porter it will be right in their line of work in which they already operate in. With the use of various mediums for communications especially Snap Chat and Instagram, Starbucks will be able to allow their consumers to share their stories and experiences with the new product along with any feedback.

Resources:

Ashe-Edmunds, S. (n.d.). Examples of positioning strategy in marketing. Small Business Chron. Retrieved from http://smallbusiness.chron.com/examples-positioning-strategy-marketing-10166.html

B2B International. B2B marketing strategies in developed & developing countries. Retrieved February 25, 2017, from https://www.b2binternational.com/publications/global-marketing-strategies/

Bhasin, H. (2016, December 2). Positioning Strategy. Retrieved February 11, 2017, from MARKETING BASICS, http://www.marketing91.com/positioning-strategies/

Clasen, A. (2015, April 22). Why Instagram is so important to Millennials. Retrieved February 19, 2017, from Instagram Marketing, http://blog.iconosquare.com/instagram-important-millennials/

E. & C. G. Cuban coffee beans - espresso & coffee buying guide. Retrieved February 23, 2017, from Uncategorized, https://espressocoffeeguide.com/gourmet-coffee/coffees-of-the-americas/cuban-coffee-coffees-of-cuba/

Farnesina. The Italian economy. Retrieved February 22, 2017, from http://www.esteri.it/mae/en/ministero/servizi/benvenuti_in_italia/conoscere_italia/economia.html

Fromm, J. (2014). The Millennial consumer craves craft beer Retrieved from http://www.millennialmarketing.com/2014/01/the-millennial-consumer-craves-craft-beer/

Griffith, I. (2012, June 14). 7 recommendations for a balanced global marketing strategy - smart insights digital marketing advice. Retrieved February 25, 2017, from International marketing, http://www.smartinsights.com/online-brand-strategy/international-marketing/7-recommendations-for-a-balanced-global-marketing-strategy/

Herz, J. (2016, August 15). Brewers Association. Retrieved January 28, 2017, from Communicating Craft, https://www.brewersassociation.org/communicating-craft/understanding-todays-craft-beer-lovers-millennials-women-hispanics/

Kokemuller, N. (n.d.). The importance of timing for a new product launch. Small Business Chron. Retrieved from http://smallbusiness.chron.com/importance-timing-new-product-launch-66014.html

Kolarich, M. (2016, March 30). 17 things you need to know before doing business in Cuba. Retrieved February 25, 2017, from https://www.entrepreneur.com/article/273135

Lawrmore. Marketing communications techniques. Retrieved February 19, 2017, from https://lciweb.com/marketing-communications-techniques.htm

Loeb, W. (2013, January 31). Starbucks: Global coffee giant has new growth plans. Forbes. Retrieved from https://www.forbes.com/sites/walterloeb/2013/01/31/starbucks-global-coffee-giant-has-new-growth-plans/#27e8bb124f87

Lynch, J. (2015, June 9). Why TV is still the most effective advertising medium. Retrieved February 19, 2017, from http://www.adweek.com/tv-video/why-tv-still-most-effective-advertising-medium-165247/

Schiff, J. L. (2014, February 26). 7 ways to create a successful integrated marketing campaign. Retrieved January 29, 2017, from http://www.cio.com/article/2377257/online-marketing/7-ways-to-create-a-successful-integrated-marketing-campaign.html

Speculations, G. (2016, October 13). Starbucks is maintaining its competitive edge. Forbes. Retrieved from http://www.forbes.com/sites/greatspeculations/2016/10/13/how-is-starbucks-maintaining-its-competitive-edge/#57e5a64d5a7f

Wunker, S. (2011, December ). Achieving growth by setting new strategies for new markets. Retrieved February 12, 2017, from http://iveybusinessjournal.com/publication/achieving-growth-by-setting-new-strategies-for-new-markets/

Ze, Z., & PR, S. (2011, May 03). Microsoft forefront TMG. Retrieved February 19, 2017, from http://ebookcentral.proquest.com.ezproxy.snhu.edu/lib/snhu-ebooks/detail.action?docID=692440

Part 2

MKT 605 – Final Project Part II

Global Marketing Communications

Breaking into a new culture who is known for the cultivation of coffee beans and utilizing them in ways that other countries haven’t heard of can be a rather tricky task for Starbucks. Knowing the culture and the people around is the key to success in a small country like Cuba. Wording and content on advertisements will need to be changed to be appealing to the culture and with Cuba Starbucks will have to be mindful of holidays and other important events to the country. Notable holidays and days of observations in Cuba that would need to be understood and applied into the release of coffee craft beers would be the following:

May 1 – Labor Day (National Holiday)
May 20 – Cuba’s Independence Day (Observation Day)
July 25 – Revolution Anniversary (National Holiday)
July 26 – Day of Rebellion (National Holiday)
July 27 – Revolution Anniversary Celebration (National Holiday)
Oct 10 – Beginning of the War of Independence (National Holiday) (Time And Date, n.d).

If Starbucks went into Cuba blind and didn’t understand their national holidays and days of observation the consumers in the country would think that the company was insensitive and didn’t care about the culture in which they were selling into. Culture encompasses etiquette, manners, and international importance and this is where it all begins for Starbucks on the release of a new coffee craft beer. Being well-versed within a company’s culture goes a long way in the success of not on the product but the company itself. This reflects on the cultural influences and attitudes and makes the Cuban population feel as is their culture is important and that they are helping in the shaping of a new product (Brunot, n.d.). If any cultural implications are ignored by a global company or any new start up breaking into a new country then it derails the business venture and ultimately destroys any global brand recognition. Cultural sensitivity is key for Starbucks with the coffee craft brews that will be introduced into the coffee culture of Cuba.

The adjusted communication is consistent with the communication plan that was implemented in part I. The plan is to break into new countries that Starbucks does not operate in, with Cuba being one of those countries. As previously mentioned there is so much room for potential and growth in the Cuban culture especially since they are known for the cultivation of coffee beans. With this communications plan and brand positioning plan that Starbucks have created and looks to implement within the country, they are hoping to increase jobs and give the Cuban population more work for more money. Since the population typically only makes $20-30 a month, with Starbucks going into the country to create and sell coffee craft beers they are hoping to increase jobs and wages to make the country more profitable and change the economy over a period of time. With these jobs that will be opening up Starbucks will be close on all and any national holidays and observation days so the country can continue their rituals.

For the forms of advertisement, Starbucks will have to go with general print advertisements and will need to building up the technological advertisement as the economy begins to grow. Since Cuba isn’t a country that is necessarily profitable like the United States, advertising needs to be smart and strategic. With general print ads in newspapers and magazines, people will be able to read about the new positions and jobs that will be opening along with how Starbucks will be releasing a new product. Word of mouth communications will go a long way in the country. As a good brand reputation continues to be built over time, Starbucks will create a recognizable brand that the Cuban culture will associate with coffee beans and even beers of any type and flavor. While there are disadvantages to using print advertisement, this is the best way to approach the new global transition for Starbucks since technology is not a top priority in Cuba.

Resources:

B2B International. B2B marketing strategies in developed & developing countries. Retrieved February 25, 2017, from https://www.b2binternational.com/publications/global-marketing-strategies/

Brunot, T. Yourbusiness.azcentral.com. Retrieved 19 March 2017, from http://yourbusiness.azcentral.com/importance-knowing-foreign-countrys-culture-considering-business-there-6476.html

E & C. G. Cuban coffee beans - espresso & coffee buying guide. Retrieved February 23, 2017, from Uncategorized, https://espressocoffeeguide.com/gourmet-coffee/coffees-of-the-americas/cuban-coffee-coffees-of-cuba/

Holidays and observances in Cuba in 2017. (2017). Timeanddate.com. Retrieved 20 March 2017, from https://www.timeanddate.com/holidays/cuba/

Kola rich, M. (2016, March 30). 17 things you need to know before doing business in Cuba. Retrieved February 25, 2017, from https://www.entrepreneur.com/article/273135

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