Ques 1.

TGBL Marketing Mix (4Ps) Analysis

Starbuck’s marketing mix (4Ps) equally emphasizes the elements of product, place, promotion,
and price to support the company’s brand image and competitive advantages in the coffee
shop industry. (Photo: Public Domain)
Starbucks (Starbucks Coffee Company) has a marketing mix (4Ps) that supports the firm’s
industry position as the leading coffeehouse chain in the world. The marketing mix identifies
the main components of the company’s marketing plan, namely, product, place, promotion,
and price (the four Ps). In this business analysis case, Starbucks uses its marketing mix as a way
of developing its brand image and popularity. With the strongest brand in the industry, the
company shows how an effective marketing mix supports brand development and
multinational business growth. Starbucks changes its marketing mix over time as a way of
responding to strategic challenges in the market, including competitive forces involving firms
like Dunkin’ Donuts, McDonald’s, Burger King, and Wendy’s, as explained in the Porter’s Five
Forces analysis of Starbucks Corporation. Such changes in the marketing mix emphasize the
company’s need to evolve its various business operations to maintain effectiveness against
growing competition.

The marketing mix or 4P functions as a marketing tool for establishing a unified and systematic
approach to bring Starbucks Corporation’s products to food and beverage markets around the
world. Effectively doing so supports operational effectiveness in other areas of the business. In
the context of the marketing mix, it is of critical importance to apply a suitable combination of
approaches for promoting the right products offered at the right places at the right price. The
effectiveness of this mixture supports strategies in various business areas and advances the
attainment of Starbucks Corporation’s mission and vision statements.

 Starbucks Coffee Company’s Products

This component of the marketing mix focuses on what the business offers to customers.
Starbucks Corporation continues to innovate its product mix to capture more of the food and
beverage market. The company adds or modifies product lines, with the aim of expanding its
market reach and growing its market share. The following are the main categories of Starbucks
products:

1. Coffee
2. Tea
3. Baked goods
4. Frappuccino
5. Smoothies
6. Other foods and beverages
7. Merchandise (mugs, instant coffee, etc.)
Starbucks Coffee Company’s product mix is a result of years of business innovation. For
example, the company added the Frappuccino line after it acquired The Coffee Connection in
1994. The business also has an ongoing product innovation process that aims to offer new
products to attract and keep more customers, especially because the business must attract a
diverse population of customers in the international market. Thus, this part of Starbucks’
marketing mix involves beverages, foods, and merchandise that are carefully selected or
designed to satisfy the needs and preferences of target consumers worldwide.

 Place in Starbucks Coffee Company’s Marketing Mix

This component of the marketing mix determines the venues at which customers can access
the products. Starbucks offers most of its products at cafés or coffeehouses. However, there
are various other places or channels of distribution available for these products. In this case,
the following are the main venues or places that Starbucks Corporation uses to reach its target
customers:

1. Coffeehouses/Cafés
2. Retailers
3. Mobile apps ( Swiggy, Zomato, etc )

Initially, Starbucks sold its products through coffeehouses. Eventually, the company offered
some of its products through its online store. This approach served as a major integration of e-
commerce into the company’s strategies. However, Starbucks ended its online store operations
in 2017. The strategic change reflects the company’s shift to focus on in-store experience in
brick-and-mortar coffeehouses. Nonetheless, some of Starbucks’ merchandise items are
available through retailers. On the other hand, mobile apps allow customers to conveniently
place their orders online so they could easily get their food and drinks at the company’s
coffeehouses. This part of Starbucks’ marketing mix shows how the firm adapts to changing
times, technologies, and market conditions.

 Starbucks Promotions (Marketing Communications Mix)

This component of the marketing mix refers to the communication strategies used to
disseminate information about the firm and its products, and to encourage customers to buy
these products. Starbucks Corporation promotes its products through interpersonal relations
and communications, although advertising is also part of the promotional approach. In this
case, Starbucks’ promotional mix is as follows:

1. Word-of-mouth marketing
2. Advertising
3. Sales promotions
4. Public relations
Starbucks became popular primarily through word-of-mouth marketing. In the marketing mix,
word-of-mouth usually focuses on providing the best customer experience in order to
encourage people to spread positive words about the business. The company also advertises its
products through television, print media, and the Internet. Sales promotions are used in
Starbucks Rewards, which is a program involving freebies that customers can avail after
purchasing a certain amount of the company’s products. The corporation infrequently uses
public relations, which has not always been successful for the business. For example, the Race
Together public relations campaign was widely criticized. Still, the Starbucks Foundation
continues its efforts to solve various challenges in society. The Foundation helps communities,
while promoting the company’s brands. This part of Starbucks Corporation’s marketing mix
shows the core significance of word-of-mouth marketing, advertising, and the supporting roles
of public relations and sales promotions for the coffeehouse chain business.

 Prices and Pricing Strategy of Starbucks Coffee Company

Starbucks uses a premium pricing strategy. In the marketing mix context, this pricing strategy
takes advantage of the behavioral tendency of people to purchase more expensive products on
the basis of the perceived correlation between high price and high value. The company’s coffee
products are more expensive than most competing products, such as McDonald’s Premium
Roast. Through this pricing strategy, Starbucks maintains its high-end specialty image. Still, the
company strives to develop and actually provide high quality products and satisfactory
customer experience in its coffeehouses. This part of the marketing mix directly relates
to Starbucks Corporation’s generic competitive strategy, in helping the business maintain its
premium brand image.

Ques 2.
Factors Influencing Consumer Behavior
The marketers try to understand the actions of the consumers in the marketplace and the
underlying motives for such actions. These motives are the factors that influence the consumer
behavior. These are:
 1. Consumer Behaviour – Cultural factors
Culture plays a very vital role in the determining consumer behaviour it is sub divided in

 Culture

Culture is a very complex belief of human behaviour it includes the human society, the roles
that the society plays, the behaviour of the society, its values customs and traditions. Culture
needs to be examined as it is a very important factor that influences consumer behaviour.

 Sub-Culture

Sub-culture is the group of people who share the same values, customs and traditions. You can
define them as the nation, the religion, racial groups and also groups of people sharing the
same geographic location

 Social Class

Society possesses social class; in fact every society possesses one. It is important to know what
social class is being targeted as normally the buying behaviour of a social class is quite similar.
Remember not just the income but even other factors describe social class of a group of
consumers.
2. Consumer Behaviour – Social Factors
Social factors are also subdivided into the following

 Reference groups

Under social factors reference groups have a great potential of influencing consumer
behaviour. Of course its impact varies across products and brands. This group often includes an
opinion leader.

 Family

The behaviour of a consumer is not only influenced by their motivations and personalities but
also their families and family members who can two or more people living together either
because of blood relationship or marriage.

 Role and status

People who belong to different organizations, groups or club members, families play roles and
have a status to maintain. These roles and status that they have to maintain also influences
consumer behaviour as they decide to spend accordingly.

3. Consumer Behaviour – Personal factors

A number of personal factors also influence the consumer behaviour. In fact this is one major
factor that influences consumer behaviour. The sub factors under personal factor are listed
below.

 Age and life cycle stage

Age of a consumer and his life cycle are two most important sub factors under personal factors.
With the age and the life cycle the consumers purchase options and the motive of purchase
changes, with his decisions of buying products change. Hence this stage does affect consumer
behaviour.

 Occupation

Occupation of a consumer is affects the goods and services a consumer buys. The occupations
group has above average interest in buying different products and services offered by
organizations. In fact organizations produce separate products for different occupational
groups.

 Financial or economic situations

Everything can be bought and sold with the help of money. If the economic situation of a
consumer is not good or stable it will affect his purchase power, in fact if the consumers or the
economy of a nation is suffering a loss it defiantly affects the consumers purchase or spending
decisions.

 Life style

People originating from different cultures, sub cultures, occupations and even social class have
different styles of living. Life style can confirm the interest, opinions and activities of people.
Different life styles affect the purchase pattern of consumers.

 Self concept and personality

Every individual is different and have different and distinct personalities. Their distinct
personalities and distinct physiology effects their buying decisions. Hence purchase of products
and services defers from person to person.

4. Consumer Behaviour – Psychological factors

4 psychological factors affect consumer behaviour very strongly. Let’s look at them in detail.

 Motivation

Motivation is activating the internal needs and requirements of the consumer. It can also be
described as goals and needs of the consumers. Motivation arouses and directs the consumers
towards certain goals. These needs can be psychological needs, needs of security, social needs,
esteem needs and also self actualizing needs.

 Perception

Perception is sensing the world and the situations around and then taking a decision
accordingly. Every individual look as the world and the situations differently. The judging ability
and capacity of every individual is different and hence the look at the world differently. This is
what separates the decision taking abilities.

 Learning and experience

Learning is the research of products and services before the consumer takes the decision of
buying a product. Learning and self educating these days is done online and also in groups.
Experience is taking a lesson from the past experiences of a product and service. Learning and
experience both again play an important role in influencing the consumer’s behaviour as it
influences their purchase decision.

 Attitude and beliefs

Attitude is a consumer’s favorable and unfavorable emotional condition or emotional feeling,
also its tendency of reaction to certain actions and behaviours. Beliefs of people that are the
belief that people assume the products to be as make the specifications of the products.
Hence attitude and beliefs are also important and need to be taken into consideration while
studying human behaviour

Ques 3(A).
Industry Life Cycle

An industry life cycle depicts the various stages where businesses operate, progress, prospect
and slump within an industry. An industry life cycle typically consists of five stages — startup,
growth, shakeout, maturity and decline. These stages can last for different amounts of time,
some can be months or years.

1. Startup Stage

At the startup stage, customer demand is limited due to unfamiliarity with the new product’s
features and performance. Distribution channels are still underdeveloped, so there are very few
product supply and promotional activities. There are also lack of complementary products
which add value to the customers, limiting the profitability of the new product.

Companies at the startup stage are likely to generate zero or very low revenue and experience
negative cash flows and profits due to large amount of capital initially invested in technology,
equipment and other fixed costs.

2. Growth Stage

As the product slowly attracts attention from a bigger market segment, the industry moves on
to the growth stage where profitability starts to rise. Improvement in product features leads to
easiness to use, thus increasing value to customers. Complementary products also start to
become available in the market so people have greater benefits purchasing the product and its
complements. As demand increases, product price goes down which further increase customer
demand.

At the growth stage, revenue continues to rise and companies start generating positive cash
flows and profits as product revenue and costs break-even.

3. Shakeout Stage

Shakeout usually refers to the consolidation of an industry. Some businesses are naturally
eliminated because they are unable to grow along with the industry or are still generating
negative cash flows. Some companies merged with competitors or are acquired by those which
were able to obtain bigger market shares at the growth stage.

At the shakeout stage, growth of revenue, cash flows and profit start slowing down as industry
approaches maturity.

4. Maturity Stage

At the maturity stage, majority of the companies in the industry are well-established and the
industry reaches it saturation point. These companies collectively attempt to moderate the
intensity of industry competition to protect themselves and maintain profitability by adopting
strategies to deter entry of new competitors into the industry. They also develop strategies to
become a dominant player and reduce rivalry.

At this stage, companies realize maximum revenue, profits and cash flows because customer
demand is fairly high and consistent. Products become more common and popular among the
general public, and the prices are fairly reasonable compared to new products.

5. Decline Stage

Decline stage is the last stage of an industry life cycle. The intensity of competition in a
declining industry depends on several factors: sped of decline, height of exit barriers and level
of fixed costs. To deal with decline, some companies might choose to focus on their most
profitable product lines or services in order to maximize profits and stay in the industry. Some
larger companies will attempt to acquire smaller or failing competitors to become the
dominant player. For those who are facing huge losses and do not believe there are
opportunities to survive, divestment will be their optimal choice.

Ques 3(B).
Differentiation allows you to provide superior value to customers at an affordable price,
creating a win-win scenario that can boost the overall profitability and viability of your
business. Our research indicates there are six primary ways to differentiate, including product,
service, channels of distribution, relationships, reputation/image, and pric
 Product Differentiation
Product differentiation is probably the most visible. It includes actual physical and perceived
differences, of which the latter can be acquired through advertising. Product
differentiation may take the form of features, performance, efficacy (or the ability of the
product to do what it is purported to do), meeting specifications, or a number of other criteria.
This is the general area that most B2B marketers — and probably most consumer marketers as
well — spend the majority of their time and dollars.

 Service Differentiation
Differentiation of service includes not only delivery and customer service, but all other
supporting elements of a business such as training, installation, and ease of ordering. To many,
these seem like the simple components of a business — the blocking and tackling or the
foundational elements that do not require sophistication. But think about a business like
McDonald’s. Like their Big Mac or not, they know how to differentiate on service. With very few
exceptions, you will get the same product and the same service at a McDonald’s in Texas that
you will get in Georgia, Connecticut, or California. And in each location, the fries will be cooked
the same, have the same amount of salt, and be served up equally as fresh from the fryer.
  Distribution Differentiation
Channels of distribution can also be an effective means of differentiation. Distribution can
provide coverage or availability, immediate access to expertise, and greater ease of ordering,
and higher levels of customer or technical service.

For many manufacturers facing a fragmented market, it is not feasible to reach the end user
without the distribution function. Building materials, for example, have to somehow move from
factory plant to contractor. Such products typically move through two stages of distribution
including master distributors, specialty dealers, and retailers.

 Relationship Differentiation
An often overlooked means of differentiation is through company personnel. Employees,
associates, or team members with customer interface can provide and demonstrate
competence, courtesy, credibility, reliability, and responsiveness. Responsible for executing
day-to-day client-facing communication, they are the linkage between the product and
customer. If that linkage breaks down, the business is destroyed.

 Image/Reputation Differentiation
Some businesses set themselves apart by their image either as part of another differentiation
avenue or as a separate strategic path. Normally, image is created by other forms of
differentiation such as high levels of service, superior product quality, or performance.

Image is controlled and managed by symbols used in communications, advertising, and all types
of media — written, digital, and audio, as well as the atmosphere of the physical place where
customers encounter the business. This is not limited to retail businesses only.

 Price Differentiation
Successfully competing on price requires recognition that every customer has a different price
they would be willing to pay for your product. Segmentation and differentiation allows a
business to come close to maximizing the potential revenue by offering each segment a
differentiated product at a different price.
Price differentiation (or discrimination) recognizes that the value of goods is a subjective reality,
which varies by customer, use occasion, and operating environment. In the B2B world, most
prices are subject to some kind of negotiation, and some customers are prepared to pay more
than the prevailing market price. In short, price discrimination allows a business to capture
consumer surplus — the difference between the amount consumers are willing to pay for a
good or service and the amount that they actually pay.

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