Environmental Factors

Joseph

MKT 421

Michael Seller

May 15, 2006

Environmental Factors Paper

Environmental Factors Paper

Introduction

Starbucks' wide range of business activity allows it to utilize numerous channels of product distribution. The corporation owns and operates its own production facilities, warehouses, and retail stores. This allows them full control of product design, shipping, and receiving. Starbucks' strategy is to sell premium products for premium prices and to lever Starbucks brand awareness by introducing new products and through the development of new distribution channels. Starbucks also wants to apply its name to more than just coffee. Starbucks is a leading company in the domestic and global market. Excellent management practices have allowed Starbucks to grow and prosper as an organization.

Domestic marketing

Domestic marketing is defined as activities directed exclusively in a business's home market. Starbucks Coffee has been very successful in the domestic market over the years. To expand its U.S. retail presence, the company joined with Kraft Foods to sell its coffee in over 25,000 grocery stores across the US. It has also signed an agreement with

Albertson's to open more than 100 coffee bars in some of its supermarkets. The Company also sells cold beverages (Frappuccino) with PepsiCo and a line of coffee ice cream with Dreyer's. Starbucks is also developing its own line of chocolates and is selling its brewing equipment in traditional retail locations. Starbucks has begun test marketing on a new menu of breakfast, lunch, and dinner items to be sold in its retail stores. There is currently a Starbucks located in every state, and large states like California have over 500 stores. Starbucks is defiantly established domestically, but there are still issues that the company must deal with in order to stay successful.

The company is also likely to face increasing store operating costs because of increasing labor costs. Domestic store openings and same store sales are likely to level off as the domestic retail business matures. Starbucks is now focusing more on international expansion and domestic specialty sales.

Global marketing

Global marketing is a total commitment to international marketing, in which a company applies its assets, experience and products to develop and maintain marketing strategies on a global scale. Starbucks is expanding their international retail presence, primarily through company-operated retail stores. The company has recently moved into China as part of its plan to operate 500 stores in both Asia and Europe. In 1998, Starbucks acquired a London-based Seattle Coffee Company. This gave the company an immediate presence in the U.K. and laid a foundation for future expansion in the European market. Starbucks has been involved with overseas expansion along the Pacific Rim markets such as Japan, Hawaii, Singapore, New Zealand, The Philippines, Korea, China, Hong Kong, Malaysia, Thailand, and Taiwan. Starbucks expects non-U.S outlets will eventually outnumber domestic stores. Starbucks is positioning itself as a company independent of domestic growth constraints as evidenced by it becoming one of seven NASDAQ stocks listed on the Hong Kong stock market. The Wall Street Journal quoted company Chairman Howard Schultz as saying, “We are no longer building an American company. We are building an international one that is as relevant in Hong Kong as it is in Seattle.”

Importance of Responsibility

Many instances could be beyond the control of the marketing department and the organization. These factors can be placed into five groups: social, economic, technological, competitive, and regulatory forces.

In the past year, there has been a great increase in pressure from global trade opponents and workers-rights advocates on high profile, global companies such as Starbucks. Any sort of negative publicity could greatly affect the company’s well-established brand name. Acknowledging that customers are making decisions not only on the quality of the product but on the company’ s values and following the company’