The company chosen for the case analysis and analysis is Starbucks Caffeine Malaysia Company. The company is chosen for the reason why of its well establishment in food and drinks industry and business design. There will be 3 sub parts in the business profile of the business which will be the history of the business, vision and mission of the company and a brief account of the business in local framework, Malaysia.
1. 1 Record IN THE COMPANY
The company, Starbucks Coffee was initially integrated in the entire year 1971 by 3 internet marketers in Seattle where the business of the business is mainly selling whole bean espresso. The company opened up its initial location in Seattle's Pike Place Market in yr 1982 where in fact the company had owned 5 stores that sold coffees, roasting facilities, and a inexpensive business for local restaurants. Howard Schultz, who was simply recruited in as the Retail and Marketing Manager in year 1982, opened his first caffeine bar by the name of II Giornale and bought Starbucks from the initial owners for USD 4 million after his new ideas were rejected by the initial owners of Starbucks who believe coffee should be prepared at home and the reason why of reselling espresso and espresso refreshments might distract the business primary emphasis of offering whole bean espresso.
After the acquisition, Howard Schultz rebranded his caffeine pub from II Giornale to Starbucks Caffeine in season 1987 and the business enterprise started to increase to achieve the increment of sales by 84% in 12 months 1991 following the company suffered loss as a result of overhead and operating bills increased using its development in the first 2 years of its business enlargement.
Throughout the years of 1990s, Starbucks Coffee under the control of Howard Schultz, the company had extended and growth rapidly with several work done. These efforts done to fortify the caffeine business was the business become the first private had U. S company that offered stock option program to its in your free time employees in yr 1991, completed its first general population offering in calendar year 1992 under the trading sign "SBUX", portion Frappuccino blended beverages in 12 months 1995, reselling its first ready to drink beverage, Frappuccino coffee bottle drink and exposed its first store in Japan in time 1996, Starbucks Groundwork was founded in yr 1997, a tea company, Tazo was purchased in yr 1998 and its effort to act responsibly by partnering with the Conservation International on coffee growing methods.
For the years of 20s, Starbucks Espresso Company continued to increase its business and procedure globally and responsibly. The company introduced its caffeine sourcing rules and Starbucks card in yr 2001, getting into a licensing agreement to sell Rational Trade Certified espresso in the countries of its business procedure in time 2002, opened its Farmer Support Middle, promote Starbucks Coffee Get better at Program to provide sharing opportunity about coffee in calendar year 2004 and finally between year 2008 and 2009, the business acquired coffee equipment company because of its revolutionary Clover Making System and launched the impressive VIA Ready Brew caffeine as well as its work in opening Farmer Support Center and Fair Trade Certified espresso.
1. 2 Quest STATEMENT ON THE COMPANY
Starbucks Espresso Company mission statement is "To encourage and nurture the real human spirit- one person, one glass, and one community at the same time. " There are six guiding rules that assist Starbucks in calculating the appropriateness of its decisions. They are:
Provide a great work environment and treat each other with respect and dignity.
Embrace diversity as an important component in the manner they conduct business.
Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of Starbucks espresso.
Develop enthusiastically satisfied customers constantly.
Contribute positively to the neighborhoods and environment.
Recognize that profitability is essential to the near future success.
However, solely rely on the company's mission statement to execute its company's commercial, business and marketing strategies are no longer sufficient to sustain in today energetic business environment. To preserve in this environment where consumer urges to buy more environmental matter products, Starbucks Coffee Company had its own Environmental Mission Statement that is "Starbucks is committed to a role of environmental control in all facets of our business" with the guiding rules as below:
Understanding of environmental issues and writing with the lovers.
Developing ground breaking and flexible answers to bring about change.
Striving to buy, sell and use environmentally friendly products.
Recognizing that fiscal responsibility is essential to the business environmental future.
Instilling environmental responsibility as a corporate and business culture.
Measuring and monitoring the business's process for each and every project.
Encouraging all companions to share in the business mission.
1. 3 STARBUCKS Caffeine MALAYSIA COMPANY
As talked about, Starbucks Coffee started its global extension from year 1996 beginning its first store beyond North America in Japan. As at year 2009, the business has total number of 16, 635 stores globally. Operating internationally made Starbucks Caffeine Company to record a total world wide web profits of USD 9. 8 billion for its business sales and procedure. Among the Starbucks Coffee Company global expansion market is Malaysia Food and Drinks Industry.
Starbucks Espresso Company expanded to Malaysia in yr 1998. The setting of admittance of Starbucks Caffeine Company to Malaysia expanding and operating its business is through the method of licensing. Berjaya Company Berhad is the business that obtained the license to operate Starbucks Caffeine Company locally. Berjaya Starbucks Caffeine Company Sdn. Bhd. is shaped and jointly held by Starbucks Espresso International and Berjaya Company Berhad.
Starbucks Espresso Malaysia opened up its first store on 17th December 1998 at KL Plaza in Jalan Bukit Bintang, Kualau Lumpur. The business enterprise of Starbucks Caffeine Malaysia basically are available of espresso and caffeine drinks, non- espresso and caffeine beverages, coffee-related accessories and equipment, surprise and items, souvenirs, pastries and confections. Thus far, in Malaysia itself, Starbucks had more than 115 stores working the caffeine business. In Penang itself, irrespective of Penang Mainland or Penang Island, there remain 11 stores, with 2 more stores just around the corner in Penang 1st Avenue Shopping center and Penang Straits Quay.
PART 2 Account OF MARKETING DEPARTMENT
2. 1 TOP MANAGEMENT
The top management of Starbucks Caffeine Company is leaded by Howard Schultz as the Chairman, President and Chief Executive Officer. His main work and responsibility is to disregard the entire composition of Starbucks Caffeine Company in ensuring each of the members of the company work to to the mission of the company.
He is also assist and support by the Board of Directors includes 10 members who've sufficient knowledge, skill and experience in the food and drinks industry. The associates are William Bradley, Olden Lee, Javier Teruel, Mellody Hobson, Myron Ullman, Craig Weatherup, Sheryl Sandberg, Adam Shennan, Barbara Bass and Kevin Johnson.
In Malaysia context, the most notable management of Starbucks Caffeine Malaysia Company is chaired by Tan Sri Dato' Seri Vincent Tan Chee Yioun, as the Chairman and CEO. The business, Berjaya Starbucks Caffeine Company Sdn. Bhd. is included to manage the caffeine business and it is one of the Berjaya Organization Berhad subsidiaries under the Food and Drinks Industry portion. However, Dato' Robin Tan Yeong Chin, kid of Tan Sri Dato' Seri Vincent Tan Chee Yioun, is the executive director who accountable for Starbucks Espresso Malaysia Company.
2. 2 MARKETING Office STRUCTURE
Starbucks Coffee Company marketing team is leaded by the Chief Marketing Official, Annie Young-Scrivner. The positioning of Chief Marketing Official was newly created in September 2009. In Malaysia, there is no clear section of marketing section due to the composition of the subsidiaries company under Berjaya Corporation Berhad. Berjaya Starbucks Caffeine Sdn. Bhd. is under the guidance of Dato' Robin Tan Yeong Chin.
Nonetheless, generally, Starbucks Espresso organizational framework is matrix framework where this composition combines practical and product division mutually and the employees of these divisions are to are accountable to both these section. In Malaysia, the marketing decision is manufactured out of team basis as a result of the matrix structure Berjaya Company Berhad had generally. It means every subsidiaries of Berjaya Organization Berhad are responsible for any decision making process under the supervision of the appointed professional director, in Starbucks Coffee case, the decision is finally made by Dato' Robin Tan Yeong Chin.
For the perspective of Starbucks store procedure, the marketing role comes onto the hand of district administrator, store director and every barista they had in the store to carry out certain arranged marketing decision by the Chairman of Berjaya Starbucks Espresso Sdn. Bhd. Generally, the number of barista appointed are be based upon how big is the Starbucks store, from at the least 5 people to no more than 10 people for 1 Starbucks store excluding the part time barista.
2. 3 FUNCTIONS AND RESPONSIBILITIES
In Malaysia, the execution of marketing decision is relied on Region Manager to provide overview of the marketing decision through meeting with the Store Manager and Store Professionals are to provide details of marketing decision to barista. For instance, a marketing campaign to promote a new introduced Frappucino beverage is delivered from the District Administrator to Store Director during the monthly conference and Store Supervisor after the monthly meeting will execute the marketing decision by planning and monitoring barista on the marketing of the new unveiled Frappucino beverage. This is actually the procedure for delivery on the marketing decision throughout. Also, to help ease the execution of marketing decision, shift supervisors are needed to monitor the procedure.
As District Administrator, the functions and duties held on hand are as implemented:
Create and maintain customer and partners Starbucks Experience
Regularly and customarily exercise discretion in taking care of the overall procedure of the stores within the allocated district
Modelling and behaving relative to Starbucks guiding principles
As Store Manager, functions and tasks held on hand are as used:
Ensuring that the Starbucks Service Experience is consistently provided for all customers
Ensuring quality of store operations
Lead and empower favorably on store partners
Maximize on financial contribution
As Switch Supervisor, functions and tasks held readily available are as implemented:
Ensuring service and store requirements establish are achieved
Assist store manager with daily operating methods, such as preserving quality store procedures, maximizing financial efforts, and supervising companions development
As Barista, function and responsibility held on hand is to provide customers with prompt service, quality drinks and products.
PART 3 MARKETING MANAGEMENT PRACTICES
3. 1 STARBUCKS COFFEE MALAYSIA BRAND POSITIONING
According to Mullins and Walker (2010), brand setting can be explained as the image that the marker intends to place in to the consumer mindset comparing with other brands and the ways the brand is put in the consumer mindset. It could be said as just how a company want the consumer to see of its company product or service.
In the situation of Starbucks Espresso, the company possessed placed the brand in to the way of thinking of its consumer as "Third Place" environment. The "Third Place" environment relates as the area other than work area and home an person can visit to relax, gather or socialize with friends and family. Therefore, Starbucks store is often decorated and filled with warm and comfortable environment such as nice sofa, Wi-Fi services, music and catalogs wanted to consumer.
Additionally, Starbucks also placed its make of a quality-oriented product and services. Quality product refers to its finest espresso drinks and service refers to its environment, professionalism of its barista in producing the finest caffeine and just how its treat the client. Starbucks Espresso understand the important of brand placement in the consumer mind as the customer won't revisit if the product or service offered wouldn't normally satisfy their flavour and choice on espresso.
3. 2 Michael Porter Universal Competitive Strategies
Starbucks Malaysia is operating its business in the local food and drink industry by implementing the Michael Porter Generic Competitive Strategies which intends to specify the company idea to compete in the industry while preserving its competitive advantages over its rivalry.
The company in Malaysia is practicing the differentiation strategy. Commonly, Starbucks established fact for its quality of caffeine. It has its high quality resources of coffee bean and plantation. These made the company different from the neighborhood company that do not serve quality but price as they main benefits. The company is differentiating the nature of the business enterprise from local coffee company such as Old Town White Caffeine. Starbucks developed the idea of Third Place to preserve its consumer by placing the perception of Starbucks Espresso store as their third place apart from working environment and home. It intends to generate the sense of owed of its stakeholders and so enhancing the relationship with them, retaining them and attracting new potential non-coffee market.
In brief, Starbucks Malaysia is working the business in Malaysia using the differentiation strategy in term of quality of the espresso provided and the comfort environment wanted to its consumers to take pleasure from the life apart from working and home environment.
3. 3 Corporate and business Social Obligations Strategy
Today, working in the strong business environment, company must response shortly to consumer flavor and preference. Environmental issues have now becoming a concern for consumer prior to making purchase decision. They are actually more aware and alert than before seeking environmental information in regards to a company's product adding their initiatives to preserve the surroundings.
Starbucks, as one of the world leading espresso company, is facing controversy of espresso towards the health of human being. Because of this, Starbucks Malaysia, has followed the corporate sociable responsibilities strategies as one of their marketing management procedures before the concern is highlighted widely. Starbucks Malaysia has its decaf caffeine powder to lessen the impact if caffeine containing drinks towards the health of its consumer. Consumer can order espresso brew from level of caffeine or decaf coffee powder. Also, Starbucks Malaysia is also offering its consumer selection of milk to brew the coffee. Consumer can either order their caffeine using low fat milk or low fat soymilk.
In term of stakeholder interest, Starbucks Malaysia treats their workers as spouse by offering them comfort working environment. The employees may take a short chance after a working hour of 5 hour, free drinks to encourage its employees daily up to 5 cups of beverages. Starbucks Malaysia is committed to the foundation of the caffeine product, the environment and the communities. Lots of initiatives done to realize the corporate sociable responsibilities technique to ensure the self-confidence of consumer towards the business such as Espresso Sourcing Recommendations, Conservation Coffee, Good Trade Certified Coffee, Organic Espresso, Starbucks and CARE as well as their global commercial social responsibilities confirming which further dwelling address the stakeholder's interest of environment and community in details.
It is clear that Starbucks widest use of marketing tool is through referral marketing as customer can help the company to talk about and spread the product quality product offered. However, for the reason why of coffee health insurance and environmental and areas concern nowadays therefore of globalization, consumer nowadays demand more on the product that they purchase. They demand more on intrinsic value that they could enjoy buying a company's product while extrinsically enjoying the product of the company.
In the truth of Starbucks, to provide finest quality of caffeine symbolize that the prime price placed for its coffee which will slowly weaken down its competitive position on the market especially during global financial meltdown. To get over or slower the procedure, the company change the concentrate of the consumer on price but to improve their awareness on Starbucks work done to the surroundings and community in think about their premium espresso price compare to the competitors. Because of this, corporate social duties strategy is nowadays a good marketing management methods a company can used to sustain its market position and show in the industry.
PART 4 MARKETING MANAGEMENT ISSUES
4. 1 INTERNAL MARKETING
Starbucks Coffee online marketing strategy is through person to person to advertise its beverages. Step one to foster this online marketing strategy is through its companions or barista. They receive many perks in working with Starbucks such as worker stock option, free beverages and staff purchase discount of goods. By doing this marketing management methods, it distributed the brand image of Starbucks of being a dependable and caring company to its associates and barista. It really is a mission that Starbucks intends to accomplish available.
Nevertheless, in Malaysia framework, the response on the marketing management practice is not effective and efficient. The main concern with its internal marketing is the incapability or improper individuals hired to handle the marketing goal behind the marketing management practice. Store director hired to handle the store could not carry out the duty and responsibility effectively and effectively. A number of the stores aren't profiting and the weather to work is not harmony such as Prangin Mall Starbucks.
Additionally, due to the incapability of store director, the operation of store is managed in an unorganized manner where there are issue between store supervisor and transfer supervisor, turmoil between transfer supervisor and barista, bad service quality wanted to customer and also unprofessional of barista planning coffee to customer. This gradually will donate to the bad brand image of the business since its main marketing management practice is through referral marketing strategy to promote the company.
4. 2 MARKETING MIX
Starbucks Coffee, a firm in Malaysia where often receive touch upon their marketing blend. Starbucks Espresso always being tagged as overprice on the coffee product. For example, a Grande size of coffee cost consumer about RM 10 to RM 12. The price is relatively high compare to other espresso company such as Old Town White Caffeine. This is a concern to Starbucks in Malaysia for the niche market of coffee enthusiast and non-consumer market especially during global financial meltdown where in fact the issue will be magnified and talked about. Moreover, because of its years of activities in the industry since 1971, the business should have achieve the knowledge curve and market of scale in producing coffee beverages, the price of coffee drinks rightfully can adjust to a more affordable level yet somehow they are providing standard but overpriced coffee beverages.
Furthermore, it is exceptional to see a commercial of Starbucks on the mass media such as tv. Despite the fact that Starbucks is utilizing the electronic media such as website and Facebook to promote their product, but the mass media where a company product can simply reach to consumer knowledge continues to be tv or radio in Malaysia. For this reason, to find new market or to penetrate the existing market, Starbucks will face barriers. Also, this has effects on the buyer product purchase decision as if consumer perceived espresso as drinks that may cause injury to their health, the sales of drinks will lowered since nowadays the factor of healthy and environmental friendly are being much aware and highlighted in consumer purchasing decision.
4. 3 MARKETING CAMPAIGN
Being a complete wide known brand of Caffeine Company, Starbucks success not only because of its finest quality of bean coffee and standard making knowledge, skills and experience, but also on its successful marketing campaign carried to enhance the brand. Regrettably, in Malaysia context, it is insufficient initiatives done to enhance the brand.
Comparing the international websites and local websites of Starbucks, it is easy to identify several have and not between the international and local Starbucks websites. There is no Starbucks Credit card in Malaysia but you can find Coffee Bean Cards in Malaysia. It really is convenience to buy Starbucks product online however in Malaysia framework, this feature is not added in to the websites. Gleam My Starbucks idea websites for consumer responses and response towards the company. Sadly, in Malaysia Starbucks website, these features aren't added into it. The only real reason that triggered to this issue is the ownership between Berjaya Firm Berhad and Starbucks International as the share kept by Berjaya Firm Berhad only 50% as the other are with Starbucks International.
4. 4 THE "THIRD PLACE" CRISIS
Starbucks Coffee is being proud of the concept of 'Third Place" brand position strategy it acquired for its caffeine business. The company undoubtedly achieve its targets and goals to provide quality caffeine beverages. In Malaysia context, it is a favorite place to trip to for gathering, chatting and even conference or direct offering. Consumer treats Starbucks Caffeine as a place of the interest rather than a place for them to relax or gathering. But, due to the rapid changes in business environment and the progress of Information Technology, people are receiving busier than before and a spot to stop by to relax and gather seems to be wasting time. The scenario even most detrimental when the product priced a higher price compare to other of its rivals.
Additionally, in Malaysia, to tap on the fast and occupied working life, Starbucks Espresso Malaysia had began the Drive-Thru concept of Starbucks Coffee to satisfy the needs of consumer buy their coffee on the way of their highway path to work, for example, Starbucks Caffeine got its Drive-Thru in Setia Alam, Shah Alam and Setia Tropika, Johor Bahru which had indirectly itself weaken down the brand setting concept of "Third Place".
4. 5 THE RISK OF Common STRATEGY AND CSR STRATEGY
Michael Porter Generic Competitive Strategy and Corporate and business Social Obligations (CSR) Strategy are both effective and common strategies to use in a business. Both strategies help differentiate a business from its challengers. Michael Porter Common Competitive Strategy concentrate on either low priced, differentiation or concentration strategy while Commercial Social Tasks (CSR) Strategy give attention to the environmental and communities contribution.
Nonetheless, these strategies need to weight balance between one and another. Over focus on both strategies might impose effect on price. Price will surge because of this of cost development on product to differentiate from rivals rise or the contribution to environment and communities cost being copy to the burden of consumer.
