Memorandum

Business analysis

Having analyzed annual reports of the company for the last two financial years, I have identified key areas that would inform the company’s marketing strategies. In this memorandum, I have highlighted trends in the company’s performance. It also shows key changes in the company’s revenues as well as additional analysis that advises on the marketing pathway that the company should adopt.

The excel provided details an analysis of the 2017 and 2018 financial years. From this analysis is evident that the company continues to enjoy a stable increase in revenue. The revenue posted by the company is from both domestic and international sales. International sales show a huge increase compared to domestic sales. However, net sales from both categories show that the company still retains a competitive advantage in the industry.  

The slow domestic sales by the company show that there is a need to focus on internal marketing. Though gross profits have been increasing, other factors could, in the future, inhibit this growth. For example, the company increased its coffee prices in 2018 without impacting the upward trend in gross profit. This shows that the company has an inelastic demand. This also reveals the presence of loyal customers.

Additional analysis of the retail coffee and snacks industry reveals that the competitors have been offering similar products and expanding their stores. The rapid expansion of coffee shops by these companies is unlikely to affect international sales but rather domestic sales where they have established a presence. 

Marketing should be geared at attracting more loyal customers and accommodating customers sidelined by the company’s premium pricing strategy. Starbucks should ensure that it targets the lower-income segment, which also tends to be price-sensitive. This low-income group, comprise of millennials who do not have the purchasing power. The marketing strategy could engage them in reward programs or free music from the company’s music record. Starbucks ‘ marketing strategy should also customize space in its store such that it could accommodate students so that they can gather for discussions. Starbucks should adopt differentiated marketing. Here they can focus on one or two market segments and design separate offers for them. They should not ignore market segment differences such as age and tastes. The differentiation is informed by the fact that its competitors have also been providing different blends to their customers.

The analysis also noted that in previous years, especially in 2016 and 2014, the company experienced a drop in revenue. Further analysis revealed that this was attributed to shifting coffee bean prices. There is a need for Starbucks to accommodate producers who, in this case, are farmers in their business. The company should play a more significant role in championing climate change and advocating for fair payment to farmers. Customers are increasingly appreciating companies that are environmental and people conscious as well as those that participate in corporate social responsibilities

The company must come up with a marketing strategy that should identify areas that have experienced slow growth in sales. Concentrating on these areas and taking the necessary marketing model, it is likely that sales would improve. The marketing strategy should also learn from the marketing strategy of its competitors that have yield positive results as well as a negative impact. This way, the marketing strategy goals should ensure the company remains true to its missions while driving up sales ethically and fairly. Marketing to the right target market will help improve sales.

Part 2:

The company that was selected for this analysis is Starbucks. Starbucks is a coffee chain store headquartered in Seattle, Washington. As of 2019, the company has over 30,000 stores in 80 markets around the world. The company has more than 150,000 employees (Starbucks, 2019). Starbucks offers a wide range of products and services ranging from 30 blends of coffee, salads, handcrafted beverages, sandwiches, and young parfaits. The company has expanded its offers to sell merchandise such as tea brewing equipment, mugs, books, gifts, packaged goods, and accessories. The company operates under various brands, which include Seattle Best Coffee, Starbucks Coffee, Teavana, Evolution Fresh, Ethos Water, and Torrefazione Italia Coffee (Starbucks, 2019). Starbucks operates a music label, Hear Music, which plays music exclusive to their stores. The music is also sold in its coffee shops as well as traditional music stores.

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References

Starbuck 2018 Annual Report. (2019). Annual Report. Retrieved from https://s22.q4cdn.com/869488222/files/doc_financials/annual/2018/2018-Annual-Report.pdf

Starbucks. (2019). Manufactured Goods. Retrieved from https://www.starbucks.com/responsibility/sourcing/store-products