Unit 1 P1 Starbucks

How is marketing used in two companies

Marketing is the action of promoting and selling a product or service, and it also includes advertising and market research.

Starbucks

Starbucks is a global company. Starbucks is a franchise that has over 17,000 stores in over 50 countries. It employs almost 200,000 people worldwide. It is in the private sector. In the year 2014 Starbucks revenue was 16.45 billion US Dollars. The secondary sector is where they take raw materials and make a product that is later on sold. They a in the secondary sector because they produce a product, coffee. They take the coffee beans and produce a coffee and sell the product. The tertiary sector is where they sell a service. Starbucks is also a tertiary sector because

they sell products that are not there own, they provide seating and a drive through. These are all services.

Purpose and how they make money
Starbucks purpose is sell goods and services. Ultimately like every private sector business their aim is to make money, profit. Starbucks started of as an individual shop but did so well it expanded and eventually became a franchise. Starbucks makes money by selling coffee, hot chocolates, bottled drinks, doughnuts and pastries/ cake. These are goods. They also have a drive through so that customers can get their drinks on the move. This is a service as they are allowing you to pick up goods on the move. They sell frappuccino which is originally from Starbucks. Offering these services and goods makes them money and increases popularity which increases the market shares.

How the business expands
A franchise is a where you can open a shop using their name and there products but you have to pay for this privilege at the beginning and monthly. When you pay a large amount at the beginning the company will give you the sign and set up the design of the shop. They are a public business and a franchise. One advantage of being a franchise is that you can expand and without having to spend money. Another advantage is that Starbucks doesn't have to do anything except collect money after setting up the new shop. Setting up a store involves training staff, new sign and getting equipment and doing the interior design of the new shop.

Target market
Starbucks target market are people who professions that drink coffee on a daily business. This can be inferred by the fact that Starbucks have made it easier to get coffee on the move, with their drive through. They also target people who work on the move or from home. They do this by having free internet access in there shops. Starbucks also see themselves as ‘neighbourhood gather place’(Starbuck.co.uk). They sell more than coffee to attract a wider target audience, they sell cakes, pastries and bottled drinks. This attracts students as to go to Starbucks as it is a place where they can work and where they can socialise. Starbucks also opens very earlier allowing people to get a coffee and maybe breakfast on the way to work. Its wide range of products attracts a wide range of people with different interests and tastes. Starbucks has shops everywhere, service stations, next to busy train stations and in the centre of town. This allows people who work in the centre of town to get coffee on a break, on the way to work. As there a set on service stations people who are travelling can stop and get a coffee and a snack to keep them going on long journeys. Starbucks also attract environmentalists and people care about the environment by making environmentally friendly cups and using renewable sources of energy.

Starbucks market relationship strategy is a card. When you buy this card you can earn stars which get you free beverages. One use of the card equals one star. Another way Starbucks build market relations by sending you emails with news and offers. These offers and card make customers more loyal. If you have 50 stars in a 12 month period than you are put on the gold level(higher level) and you will be entitled to the green benefits and extras. The higher the level the better/ more rewards you earn. This is an encouragement for customer to go to Starbuck, so they can get better prizes.

Tesco
They have over 6 500 stores across 12 countries. Tesco sell multiple products such as food, phones and more. They are a general retailer store. They make £3 billion profit a year. Tesco have 500,000 colleagues. There are multiple different stores such as Metro, Express, Homeplus shopping on the go, Dobbies garden centre and Onestop. They even have Tesco bank.
PLC is a public limited company. Tesco is a PLC. This means that anyone can buy shares. This means that competitors can buy part of this business which means if they eventually own the majority of the business they can change the company, you lose control of your business. On the other hand every time someone buys shares Tesco get money which can be refunded into the business and people with specialities can buy in and improve the business, such as someone who specialises in advertising. The shares are sold on the stock market. Tesco share price is 179.95p but it is constantly changing.

There is many different methods of pricing;
Premium pricing is high price for high quality.
Penetration prices is when the price starts low and then increases over time.
Economy pricing is when the price starts low and stays low.
Price skimming is prices start high and then go down.
Psychological prices is where the customer has an emotional reason to buying the product.

Tesco sell a range of products at a range of prices. Tesco uses all of these techniques.
Starbucks sell lots of products at a high price. They use premium pricing techniques. This makes the business appear like it is a higher quality. There is over 3500 stores in the uk so they are lots of location to shop at. There is over 500 Starbucks company operated stores in the uk. This means that the stores are found more in specific locations. This makes them seem more unique but there are placed in convenient locations, centre of town, service stations. This enables lots of people to buy there products all day long. Tesco promote themselves by

Tesco target market are families generally but sometimes there have individual items that attract a range of people, such as a HD widescreen tv that attracts;
Demographic-all ages, both genders, low income to middle income range, students and single men, working class to middle class.

Tescos geographic is semi rural and urban. This is because the majority of families live in these areas so this is why there are based here. They attract customers by using the penetration which is selling products are a low price so more people come and buy there and then at a later date increase the price but have gained a few customers in the process.

Tesco market relationship strategy is that customers have a clubcard that makes them more loyal to Tesco. This is when customers get clubcard they scan it every time they shop at Tesco. Every scan adds up points, when you reach 150 points you get sent vouchers with your clubcard statement. You can also get sent coupons for Tesco. This enables you to get money off your shop at Tesco. All of this is to keep you a loyal customer to Tesco. Tesco also hold competition for when you buy a certain product you may win a vouchers for Tesco. This makes customers want to go to Tesco more as there is more chance of winning better vouchers and getting a cheaper

shop.

Ansoff Matrix
This is four market strategies that involve, market penetration, product development, market development, product/ market diversification.
Market penetration is where the a business sale existing products into the existing market.
Market development is where the business sells existing products to new markets.
Product development is where the business sells new products in existing markets.
Diversification is where a business sells new products on new markets.
All of these strategies are growth strategies and helps the business define the aims of where to sell the product depending on the product, and which one will help its growth.

Starbucks use market penetration(MP) and product development(PD). They sell coffee to regular coffee drinks, which is MP, they also come up with unique beverages like ‘pumpkin devotion’, which is PD. Both of these strategies keep customer returning and spending there money at Starbucks. This results in the business being successful in both finance and popularity areas of business. Loyalty card is also another way Starbucks keep customers returning and this technique is a MP technique. It gives customers more reasons to return so they do. Starbucks did also use market development when they branched over sea to England.

Tesco use MP to keep existing customers returning.

They do this by using a loyalty card that works on points and in return getting vouchers meaning money off your next shop. Tesco also use market development when they decided to branch out oversea into countries like poland but this did not always work. Tesco are now pulling out of asia and concentrating more money on the uk Tescos because they were not doing very well in asia and they were/ are losing business in the uk as well. Tesco also use PD where they sell standard services to their existing customers, such as a petrol stations. This makes more customers want to go to Tesco because they know they can fill up their car as well.

Survival strategies and life cycle

A product life cycle is where you product has an intro where it sale are increasing and then it has a growth where the product sells even more quicker and this known as the product maturity. When the product has reached its peak of sales and this is known as the product's maturity. It then goes into a decline when the products are not selling as much. Here is a graph of what it looks

like.

A good business like Starbucks have multiple products on the go at the right times. This means that there is always a product growing when one is declining. This means that the business always are making money and have product on the growth.

Tesco use a range of survival strategies. These strategies are becoming extremely vital if Tesco want their business to continue operating. Tesco are closing down stores and selling them in asia to free up money to reinvest in the uk stores because they are losing customers. Another technique is making more and more employees redundant to free up money. To replace these people they are training people up meaning that they get paid less as they are less qualified and have less experience. This enables the business to have more money to reinvest and survive.