Marketing Principles

Marketing Principles Techniques for Business

Introduction To Marketing Principles

Marketing can be defined as communicating, delivering, exchanging and building relationship with customers in order to sell the product. Marketing principles are used to make marketing strategies and improve the market performance of existing product and launch new product in the market share. In this report the various aspects of marketing have been covered and applied on the Context of Starbucks. Starbucks is a American based global coffee companywhich owns coffee houses chain headquartered in Washington. The report covers cost benefit analysis of new product, product development strategies and element of marketing (Shi, Cheung and Prendergast, 2005) Further, the report discussed about the marketing mix strategies for the different segments, segmentation criteria, segmentation strategies and pricing strategy for the new product. Moreover, the report described the macro and micro environmental analysis and positioning strategy for the product.

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1.1 Elements of Marketing

Marketing can be defined as a process of communicating with customers to sell goods and services to them and making good relationship with customers by delivering value to them. The key element of marketing are described below :-

Situational analysis

Situation analysis includes SWOT, PESTLE and macro environmental analysis in which the external and internal factors of market are analyzed. In Starbucks, the PESTLE and SWOT analysis is conducted to analyze the market situation (Hill and Hernández-Requejo, 2011)

Identifying target markets

It includes the identification of the specific area in which the company wants to sell its product and services. For Starbucks the target market is selected for its product and the strategy adopted by the Starbucks is according to its target market (Popescu, 2013).

Setting marketing objectives

After identifying the target markets, the marketing objectives are set. The marketing objectives of the companies aligned with its business strategy in order to achieve it. For the Starbucks the marketing objective is to cover wide market share.

Considering marketing elements

It is very important to identify the needs and wants of the customers and the key marketing elements helps in it. These key elements of marketing are price, product, place and promotion. For Starbucks, these key elements helps in formulating the strategy for its target market and achieving its objectives (Bock and Uncles, 2002)

Control and Revision

Control and revision is necessary to achieve organizational effectiveness and timely completion of the marketing targets. In Starbucks, the control and revision is done to achieve the targets , avoid mistakes and timely completion of the marketing goals.

1.2 Benefits and costs of marketing orientation

The marketing orientation includes its cost as well as several benefits and these benefits of marketing helps in achieving marketing targets. Marketing orientation helps in identifying the customer needs and wants which helps in developing a product according to the customer perspective. If the product is developed according to the customers needs, it could be able to gain customer satisfaction. The product provides all the features demanded by the customers, it would be able to deliver value to its customers. The customers is satisfied with the product and creates a value for the them, it also build a long term relation with customer and achieve customer loyalty. For Starbucks the marketing orientation helps in achieving competitive advantage, customer and competitor orientation (Hall and et. al., 2008)

Marketing orientation includes several benefits such as competitive advantage, building long term relations and gaining customer loyalty but it also includes a huge cost. The cost of marketing orientation includes conducting market research and developing a research and development department. The market research is necessary to identify the needs of customers and it also involves a huge cost. It also involves developing a separate research and development department in which researchers do various new experiments with the product. For Starbucks the marketing orientations costs are market survey and a separate research and developments department for the product(Marketing mix . 2011 )


2.1 Macro and micro environmental analysis

In order analyze the competitive environment and marketing decisions the macro and micro environmental analysis is conducted. In macro analysis the PESTLE analysis of Starbucks have done in which SWOT theories is also used.

Political- The policies and the regulation of the home country impact the Starbucks to source raw material as it has to follow these policies. This is also the strength of Starbucks that it follows all the policies and rules of UK government.

Economic- Customers are shifting to lower price coffee alternatives due to recession so the Starbucks should consider it and this also a opportunity to enter in the low price coffee market for Starbucks.

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Social Factors- The Starbucks can enter to the low price coffee market but it has to sacrifice its quality so it could be lower the market share and prove as a threat to the company.

Technological factors- Starbucks can introduce mobile payments and also can avail Wi-Fi to its customers while having coffee so it can create a value for the customers.

Legal Factors- Starbucks has to work in the regulatory framework of the UK and insure that it is not involved in any type of wrong activities.

Environmental factor- Starbucks has to consider all environmental factors to acquire the trust of customer.

The porters five forces analysis is important for conducting competitor analysis and strategy development. The application of Porter's five forces framework to the Starbucks is mentioned below :-

  • Threat of new entrant is very high as the European union promote the competition in UK to eliminate the monopoly.
  • Threat of substitutes is moderate to high the demand for the energy drinks are increasing and the customer are becoming aware with the negative impact of caffeine.
  • Bargaining power of the buyers of the customers is very high as the many offers available in the industry and there is no switching cost in use of coffee (Popescu, 2013).
  • Bargaining power of suppliers is very low as Starstruck purchase raw material from the suppliers in bulk so if the bargaining is done by suppliers then Starbucks will switch to other suppliers.
  • Rivalry among existing competitors is also very strong as there are very much competitors available in the market. The strategy of Costa coffee is to provide a good ambiance to attract customer. Similarly, Starbucks also provide a good ambiance as they market services, they do not only sell coffee (Varley, 2014)

2.2 Segmentation criteria for the product

There are various strategies used for the segmentation on the basis of age groups,n locations and preferences. Following are the segmentation strategies used by the companies :-


Target market is selected on the basis of its demography such as age groups, life style, social class and income so that Starbucks can fulfill its targets customers needs.


Starbucks divide market according to the geographical location of the market such as urban and rural to select the best serve its customers and identify the needs (Varley, 2014).


In behavioral segmentation the buying behavior of customer are are analyzed to design and position a target market.
Starbucks adopted behavioral and demographic strategy for its new product Star coffee while considering criteria such as age groups, life styles and locations.

2.3 Targeting strategy for the product

There are various targeting strategies for the product differentiated, undifferentiated strategies and concentrated strategy. Undifferentiated strategy means applying same strategy for the whole market. In concentrated strategy, a promotional strategy which communicates benefits to a specific segment. In Differentiated strategy, designing number of promotional message communicating different benefits to each segment. Starbucks is adopting concentrated strategy r its Star coffee product as the company has selected its target market on the basis of demography and geography (Varley, 2014)

2.4 Affect of buying behavior on marketing activities in different buying situations

Buying behavior of customers have a significant impact on the marketing activities in different buying situations. If the new customer visit the Starbucks outlet, he will search for the information related to the products offered by the company. But if he again visit the Starbucks outlet, he will be informed and aware with the products and prices offered by the Starbucks. There are many factors such as price, services, ambiance and test which influence the customer to visit the outlet again and again (Wilkinson,and, 2013)

2.5 New positioning strategy for the product

Starbucks can adopt a new positioning strategy for its Star coffee product to deliver value to its customers. Starbucks set the price of Star coffee low in comparison to its competitor and also offer combo packs with the coffee so that it could create a value and attract its customers. In combo pack snacks could be offered by the Firm with Star coffee at comparatively low prices.


3.1 Product development process

Following is the process of development of Star coffee in the Starbucks:-

Idea generation

This is the first stage of developing the star coffee in which the idea was generated by the analysis of market, competitor and customers. The market research is conducted to identify the needs of the customer.


The firm collects ideas from various external and internal factors at the idea generation stage then the ideas are taken under account and a feasible idea is processed for the new product.

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Concept development

At this phase the cost and benefit are identified from conducting the SWOT analysis of the Starbucks. The marketing strategy is developed for the product while considering the marketing mix such as price, place, product and promotion (Gottfredson and Aspinall,2005) In concept development, a analysis is made on the product life cycle in order to know its sustainability in the market.

Product development

It involves finalizing the product design and manufacturing the product. The testing of product is done to take the decision of launching the product in the market.

3.2 Distribution arrangement for customer convenience

Starbucks is a coffee based outlet in UK but it owns its franchises in other countries around the world. The distribution arrangement followed by the Starstruck is direct selling for customer convenience. The Starbucks sold coffee at its outlets so the customer could visit its store for the coffee. The company owns a range of outlets around the world so its very easy for the customers to approach it. The Starbucks also provide on-line services to its customers and deliver value to them (Homburg, and et. al., 2009) There are no intermediaries in the distribution arrangement of the Starbucks. But the intermediaries play a significant role where the firms use indirect selling as they make the gods available to the end user at the right time and right place.

3.3 Impact of prices on the marketing objectives and market condition

Prices are set according to the organizations objectives and market conditions as prices have a great impact on objectives and marketing conditions. For example, Starbucks have the objective of covering large market share by launching its new product star coffee thus the prices of the coffee will be set lower (Fitter, 2001). If the objective of the company is to gain more profit, the company will set its prices and will target the high society for profit maximization. There are various pricing strategies used by the companies such as penetration pricing, cost plus pricing, price skimming and premium pricing. In penetration pricing,l the prices of the product are set lower initially. In cost plus pricing method, the price is set by adding a fixed percent of profit on the cost of the product. The price strategy adopted by the Starbucks for Star coffee is competitive strategy in which the prices of product are set around its competitor to attract its customer (Different Types of Pricing Strategy, 2015)

3.4 Integration of promotional mix with marketing objectives

The promotional activities are highly connected with the marketing objectives as they both have direct impact on each other. If the marketing objective of the company is to create customer awareness, it can be fulfilled by the advertisement. If the company wants to maximize its product, it has to give promotional offers to customers such as discount (Bock and Uncles, 2002). The company will use personals selling to influence customer to purchase. The Starbucks is using push strategy for star coffee in order to get high market share and profit maximization as it covers all the promotional mix and helps in gaining the profit as well as large market share.

3.5 Elements of Marketing mix


It generally deals with developing a suitable product for the target market and the product is designed according to the needs of customers. The target market can be of certain age group, demography and the geographic location as it is a very specific combination of selected area.


The price of the product is set according to the target customers. The product should be one that the customers is willing to pay for that specific product. Prices set by the Starbucks for star coffee according to the customers so that it can create a value for them. (Foster, and Cadogan, 2000)

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Product should be sold at the right place so that customer could find it. If the product or service is very good but the customers are not able to purchase the product it will be of no use. The Starbucks provide its star coffee available at their store for customer convenience (Cave, 2005).


It includes the advertisements, personal selling and sales promotion activities to make customer aware about their new product and build long term relation with them. The Starbucks also do advertisements to make customer ware about the star coffee (Bock and Uncles, 2002)


The process used by the Starbucks to develop the Star coffee is very new and advance. The process used by the company is also determine the quality of the product so the process must be standard.


People play a significant role in delivering services to its customers so the employees must be efficient and trained. At Starbucks the staff is well behaved and posses good communication skills to deliver value to customer. (Cook, 2007).

Physical evidence

The physical ambiance of the Starbucks is also attractive as it creates a good atmosphere for the customer. The Starbucks not only sell coffee but also market services to its customers to attract them towards its outlet (Duarte, and et. Al, 2006).


4.1 Difference between business customer and ordinary customers

There is a large difference in marketing the products to the businesses and customers as marketing strategy adopted by the companies are also different. The marketing strategy adopted for the business costumers is personal selling by Starbucks as business customer are not influenced by the personal selling (Popescu, 2013).Personal selling is important to attract business customer as Firm can convince business customers best by meeting them. The business customers purchase the services in bulk so the price charged from them is also comparatively lower. The marketing strategy adopted by the Starbucks for its customer is advertisement. Advertisement is the best way to aware the customer with the product and build long term relationship with them the firm can influence customer by giving attractive advertisement. The price charge from the individual customer is comparatively higher than the business customer as they do not purchase coffee in bulk.

4.2 Difference between international marketing and domestic marketing

The international marketing is extremely different from the domestic marketing in context of adopting strategy, culture, geography, prices and demography. If the firm operate in a domestic market it has to only follow the regulatory framework of home country but if the firm operates internationally, it has to consider the regulatory framework of other countries in which the firm operates. The culture of the countries is also differ from region to region also the company have to consider the cultural boundaries while launching the product. If the product is launched in the domestic market, the firm is ware with its own country's culture but if the firm wants to launch the product in the other country, it has to conduct a market research. The Starbucks operates internationally so it has to consider the policies of the different countries, in which it has to operates (Duarte, and et. al, 2006) It also have to conduct a survey to know the culture and needs of the customers of that region in which the firm wants to enter. The European union plays an important role in promoting competition in the UK. The European union promotes the rights of of the Firms, eliminates monopoly by motivating competition and also provide monetary assistance to the companies for survival and growth (Role of European Union, 2014)


Conclusively, it can be said that the element of marketing of marketing are useful to identify the market conditions by conducting situational analysis. Marketing strategies used by the Starbucks to launch its new product is very effective. The marketing segmentation conducted by the Starbucks for its Star coffee is also effective in both urban and rural segment. Through its new product the Starbucks will be able to achieve its objective of covering wide market share. The cost and benefit analysis of the company helps in identifying the benefits as well as costs. The promotional mix of the Starbucks for the business customer will influence business customer and the advertisement will persuade customer to purchase the new product or service.


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