Mkt_575

Product Launch Plan: Starbucks KickStart MKT/571 May 26, 2013 Product Launch Plan: Starbucks KickStart “Campaigns are coordinated, purposeful, extended efforts designed to achieve a specific goal or a set of interrelated goals that will move the organization toward a longer-range objective expressed as its mission statement” (Newsom, Turk & Kruckeberg, 2004, p. 301). The Starbucks KickStart Caffeine-Infused Breads marketing and campaign team explains the product description, positioning, targeting, market needs, market potential, and growth, a SWOT analysis, the competition, marketing objectives, and strategy, pricing, communications, distribution strategy, financial information, and market research required to successfully launch the new product in the United States and Canada. The information below encompasses the master marketing plan for a new product that Starbucks plans to create, develop, bake, and distribute to Starbucks owned locations and potentially to supermarkets, convenience stores, and other locations as deemed appropriate in the United States and Canada respectively. Product Description According to Jim Donald, former CEO of Starbucks, “our goal is to continue to stay on point for new areas of focus we can convert into beverage and food offerings and other forms of keeping the Starbucks experience out in front of everyone” (Pellet, 2006, n.p.). Starbucks development of KickStart Caffeine-Infused Breads is to provide the caffeine kick needed to jump start a consumer’s day, but in the form of solid food versus a liquid beverage. By adding 200 milligrams of pharmaceutical-grade caffeine into the bread dough, Starbucks can deliver great-tasting banana bread that provides sustenance to hungry, non-coffee drinkers. Product Positioning Positioning the newest Starbucks product, KickStart Caffeine-Infused Bread comes as a result of research and experience. "Product positioning refers to consumers' perceptions of a product's attributes, uses, quality, and advantages and disadvantages relative to competing brands” (Boone, p. 392). Starbucks’ KickStart is in a position of quality, tasty, and caffeinated bread that will wake consumers up in the mornings and help get them past the afternoon slump. Targeting “Marketers often conduct marketing research studies to analyze consumer preferences and to construct product position maps that plot their products' positions in relation to those competitors' offerings" (Boone, p. 392). For KickStart, Starbucks will target existing customers with technology via apps, social media, e-mail, and face-to-face sales, generate buzz with exciting in-store signage, and entice customers to sample KickStart by offering it as a reward to Starbucks Rewards members. Market Needs Differentiated (or segmented) marketing will allow Starbucks to meet the needs of their customers. Expanding the KickStart line to include more caffeinated desserts and breads in response to each market’s needs will allow them continued growth and maintain their reputation for quality products. Starbucks mission statement is “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time” (Starbucks, 2013). Starbuck targets people who desire high quality products that come with a bit of status. Starbucks ultimate goal is to “become the ‘Third Place’, the place between home and work where people could gather, relax, and interact with one another…they paid a great deal of attention to the details of the store – everything from the layout, to the furniture, to the music” (Gangadharan, p. 2). Market Potential and Growth Starbucks has made a major impact in the coffee world, and with all good things that are created by them, the KickStart product will revolutionize the world as we know it by developing and introducing a caffeine-infused bread that will cater to a market that enjoys coffee and also for those who are not coffee drinkers but love the caffeine kick. It is important to understand the primary focus for the investor is to realize how new products have a direct effect on the company’s ventures. If the product meets the public at the level of most of the new releases by other Starbucks product launches, there should be a 10 – 12% increase in sales annually. For example, Starbucks’ new Evolution Fresh juice bar is the newest addition to the company’s offerings’. Bellevue, Washington is the first location to reveal this new product and Starbucks is excited about the new brand name that can expand the chains shops. The people’s willingness to pay will determine the success of the product. At first sight the prices would suggest how to justify a slice of caffeine-infused bread at this price, but in the short-term the program will make up for the amount of marketing to expose the product. Starbucks’ thoughts are if people are willing to pay high prices for coffee, selling bread injected with caffeine will be just another offering in the company’s products. Excitement will build as the launch date gets closer, and the customers will pack the location to drink coffee and have a slice of caffeine-infused bread. The store agreements will deliver the products and the highlights that pose a healthy lifestyle. Starbucks offers products in grocery stores, and the bread will be a part of these offers (Witrak 2012). Product SWOT Analysis ~ United States and Canada A Starbucks SWOT analysis will help to determine the strengths, weaknesses, opportunities, and threats in a simple method to display an insight into the business views as it relates to growth and potential. This process is used for both United States and Canadian products to be developed, sold, and marketed. Strengths: • The name Starbucks is the most recognizable name on the planet • Known as the barista of the globe is Howard Schultz • Known is the loyalty of the clientele that spends top-dollar for products • Starbucks has placed location globally to have a favor toward competition • The Financial stability of Starbucks is above the current competition Weaknesses: • Products sold by Starbucks are at a higher cost than their competitors • Clientele’s loyalty could change in changes in the economy • Dietary issues in the future could affect sales because of calories Opportunities: • The potential for growth of the new product in both countries • Added food products to develop new clients’ needs and services • Adding more distributions to an already successful program that offers huge opportunities in Canada and United States Threats: • Dunkin’ Brands – has sales of drink products of 60% • Panera Bread – growing in sales and locations • McDonald’s – Global scale of McCafe stores • Increasing competition is growing in the marketplaces • Tim Horton’s, a large coffee shop in Canada, poses the largest Canadian threat End result Although the competition is becoming more of a threat to the pricing, products, and players in the marketplace, Starbucks has the staying power to overcome the competition and keep a large portion of the market share. Some would say the lower prices and more competitive alternatives could cross boundary lines that separate the coffee giant. New stakes change each day to who the top players in the end results will be. The Competition Competition in Canada and United States: Competitor Channels Locations Number of Stores Kicking Horse Coffee and Gourmet Stores Canada: Quebec and Ontario N/A P&G Millstone Mainstream Canada and United States Mainstream Nestle Mainstream Canada and United States Mainstream LowBlaws Private Label Loblaw's Shops Canada Mainstream Just Us! Cafes, Colleges, Gourmet Shops, Markets Canada: Nova Scotia, Quebec, Ontario 4 stores Trident Bookseller & Café Coffee Store Canada: Halifax, Nova Scotia 1 shop Java Factory Coffee Store Canada: Nova Scotia 3 stores Tim Horton's Restaurant Canada 170 stores Second Cup Retail Coffee Shops Canada: Halifax, Nova Scotia 360 stores Chart 1: Competition in Canada and the USA. Starbucks owns the city; Tim Hortons owns the highways: the Canadian coffee war is being fought in cities, (Wolfe-Wylie, 2013). In the comparison above the numbers are clear to the competition that surrounds current Starbucks locations. Currently the competition does not offer the same products, but all have the potential to build customers from selling, marketing, and developing new products. In researching to determine competition against Starbucks in the United States and Canada, Team B found rolling out a new product in numerous stores and shops that provide drinks and foods would be most beneficial. Marketing Objectives and Strategy Choosing the right marketing objectives and strategies is very important for an organization. When implementing a new product to market. Starbucks strives daily to uphold their objectives by maintaining its standing as one of the most respected and recognized brands in the world. Starbucks has introduced a new product called KickStart; the product is currently doing very well in today’s market. The company understands that if they use ethnic sourcing, the consumer would more likely be interested in purchasing a Starbucks product. Consumers know that Starbucks is very reliable, and the people are fairly paid for the coffee beans and coffee-infused bread. The company aims to be the leading retailer and brand of coffee in each of our target markets by selling the finest quality products, for example KickStart and also provide each customer with a unique Starbucks experience. Setting forth specific objectives creates a common long-term goal to work toward. Possessing effective objectives promotes new ideas for improving business when needed and implement change. Pricing The KickStart bread product made by Starbucks is new and popular. It is imperative that Starbuck carefully selects the right pricing strategy for either a foreign market or a new market segment within the United States. Pricing strategies for products or services encompass three main ways to improve profits. Price is the one element of the marketing mix that produces revenue, the others produce costs (Kotler, 2007). Effectively designing and implementing pricing strategies requires a thorough understanding of consumer pricing psychology and a systematic approach to setting, adapting, and changing prices. Starbucks marketing team must decide what price strategy for both domestic and internationally. Exporting and international business can be very profitable and challenging, but helps business grow. However, international business is not the same as doing business in the United States. Starbucks managing marketers have learned about the different laws, regulations, consumer buying habits, and have ungraded its marketing strategies. Marketing Communication Marketing such a high quality brand should be done effectively. The better the market communication is, the better the product or service will sell within the market. Starbucks marketing team has adopted the SMART marketing plan. All communication objectives are required to be specific, measurable, realistic, and most important, well-trained. This concept has indeed helped other large and small businesses around the world, Starbuck marketers are most confident that it will help promote the new KickStart bread products. At the same time, the marketers want to avoid releasing any confusing and conflicting messages regarding Starbuck and its products. Developing a uniform approach to marketing communication allows company representatives to make clarifying statements to the public, and customers who maintain the image that the company is united (Anderson, 1999). Public Relations are also another important factor in the marketing communications process. Researching determines the right strategies and tactics that best fits the audiences and public to ensure market success. Knowing what customers want, desire, and deserve is imperative to Starbucks success. This is the main reason the KickStart bread product was created because of the demands, needs, and busy lifestyles of Starbucks consumers. Distribution Strategy Starbucks will have a methodical distribution strategy for KickStart after careful analysis of the market research conducted. Market research is an essential step when introducing a new product to a test market and if successful, further distributing the new product nationwide and internationally. The marketing department invests in a market researching firm with proven success in the food industry and the market research firm could seek out the best test markets and distribution strategies. According to Carter (2007), market research can backfire and fail if the marketing department does not clearly define the reason for introducing a new product (Carter, 2007). Based on that fact, it is important the marketing department clearly defines the need for a food-based product with caffeine instead of a beverage. Specifically, Starbucks clearly defines this need after receiving many customer suggestions via website submissions, manager feedback based on customer conversations, and the need for an innovative new product. Starbucks’ competitors include Caribou Coffee, Seattle’s Best and Coffee Bean and Tea Leaf. Each quarter, each competitor introduces new drink flavors based on seasons. Although successful and appealing to customers’ requests, there has not been any type of innovative roll out with a non-drink caffeinated product. After further research by the market research firm, they determine customers not only request additional drink choices but also something more creative and appealing to appetites. This clearly defined customer request is the feedback Starbucks’ marketing department needs to proceed with a new product development process. According to Kotler and Keller, marketing information systems, also called MIS, are systems that house information gathered from market research firms (Kotler & Keller, 2007, p. 41). In turn, Starbucks’ marketing team conducts a round table to discuss the findings presented by the market research firm as well as thorough analysis of the MIS system, and the idea was put into development and eventually production. Financial Information Starbucks marketing team determines the price point at $3.79 after comparing price points of pastries at domestic and international competitors. The price point will allow Starbucks to continue generating the same revenue patterns as similar pastries it sells while staying at a price point that consumers are in a pattern of spending. The market research department determines consumers would be willing to purchase the product as long as it does not cost $3.99 or higher. The forecasting is projected as follows: Price Point $ 3.79 Quarterly Fix Costs Variable Costs (Production) Lower 48 Costs $ 20,000.00 1.65 Int'l Costs $ 85,000.00 1.65 Units Sold Costs Revenue Margin Margin (%) Forecast Notes Q3 2013 4,600 $ 27,590 $ 17,434 $ (10,156) -37% *Ltd US Release* Q4 2013 8,500 $ 34,025 $ 32,215 $ (1,810) -5% Ltd US Release Q1 2014 26,000 $ 62,900 $ 98,540 $ 35,640 57% *USA 48 Release* Q2 2014 32,000 $ 72,800 $ 121,280 $ 48,480 67% Q3 2014 34,000 $ 76,100 $ 128,860 $ 52,760 69% Q4 2014 35,000 $ 77,750 $ 132,650 $ 54,900 71% Q1 2015 42,000 $ 89,300 $ 159,180 $ 69,880 78% Q2 2015 68,000 $ 197,200 $ 257,720 $ 60,520 31% *Ltd Int’l Release* Q3 2015 124,000 $ 289,600 $ 469,960 $ 180,360 62% *Int’l Release* Q4 2015 132,000 $ 302,800 $ 500,280 $ 197,480 65% Q1 2016 134,000 $ 306,100 $ 507,860 $ 201,760 66% Q2 2016 138,000 $ 312,700 $ 523,020 $ 210,320 67% Marketing Research Starbucks projects both domestic and international market entry strategies. Specifically, the domestic market entry strategy is as follows: • Initial limited distribution in test markets o Test markets should be an applicable representation of the lower 48 market o Test markets will be surveyed over a period of six months - Q3 and Q4 of 2013 o Product will be advertised and promoted during this time through local advertising in test markets o Product promotion will be consistent with that of a nationwide product release • Nationwide (lower 48) product release o Based upon a positive reception in test markets, product will be released nationwide in Q1 of 2014 o Product will be distributed through lower 48 states at this time o Promotion will take place on a nationwide level • Advertising will include promotional push for the 2014 new year Internationally, external marketing factors are strong influences in choosing international market strategy. According to Couturier and Sola, specific external factors are crucial, including market growth, market consolidation, and value chain fragmentation (Couturier & Sola, 2010). With Starbucks’ KickStart, market growth is a significant factor when determining the test markets. For example, Tim Horton’s Coffee House in Canada is an international competitor. Based on the most successful, highest revenue-producing Starbucks locations within proximity to high revenue-producing Tim Horton’s locations, the test markets will be in those locations first to attract potential Tim Horton’s customers. Starbucks’ international market entry strategy for KickStart is projected as follows and will also be distributed in limited markets before the official release: • International limited distribution in test markets in Canada o Test markets should be an applicable representation of the international market o Test market will be surveyed over a period of three months - Q2 2014 o At this time product will be well established in nationwide USA market o Product will be advertised and promoted during this time through local advertising in test markets o Product promotion will be consistent with that of an international release • International product release to entire Canadian market o Based upon a positive reception in test markets, product will be released internationally in Q3 of 2014 o Product will be distributed internationally at this time o Promotion will take place on an international level targeting specific demographics in local markets Conclusion “Driving bold innovations to market means installing an effective and efficient idea-to- launch process or system that is designed to handle these major, "big concept" ideas and projects” (Cooper, 2011, n.p.). Starbucks’ KickStart Caffeine-Infused Breads is a concept born of the consumer’s feedback, targeted to existing customers and enticing to new customers because no other coffee house provides such a food item. By identifying the needs and wants of their consumer’s, Starbucks should deliver a grand-slam, innovative product to their arsenal. References Anderson, Arnold. (1999). Marketing Communication Objectives. Retrieved on May 23, 2013 from http://www.ehow.com/info_7752162_marketing-communication-objectives.html Boone, L., and Kurtz, D.L. (2006). Contemporary Marketing. Thomson South-Western. Cooper, Robert G. (2011). Winning at new products: creating value through innovation, fourth edition. Retrieved from http://common.books24x7.com/toc.aspx'bookid=41982, University of Phoenix Library. Crawford, M. C. (1977). Marketing Research and the New Product Failure Rate, 41(2), 51. Retrieved from http://search.proquest.com.ezproxy.apollolibrary.com/docview/227815021'accountid=35812 Couturier, J., and Sola, D. (2010). International market entry decisions: the role of local market factors. Journal of General Management, 35(4), 45-63. Gangadharan, S. (2009). Starbucks - Targeting, Positioning and Marketing Mix. Scribd. Retrieved May 24, 2013, from http://www.scribd.com/doc/25781010/Starbucks-Targetting-Positioning-and-Marketing-Mix. Kotler, P. and Keller, K. (2007). Setting Product Strategy and Marketing through the Life Cycle. Published by Prentice-Hall. Pellet, J. (2006). Lessons FROM brand leaders. Chief Executive, (221), 26-31. Retrieved from http://search.proquest.com/docview/212108531'accountid=35812. Starbucks. (2010). Starbucks VIA ready brew hits grocery stores aisles around the world. Retrieved from http://news.starbucks.com/article_display.cfm' article_id=436 Sept 07, 2010. Witrak, C. (March, 2012). Starbucks: 5 Potential Brand-Changing Initiatives. Retrieved from http://www.minyanville.com/sectors/consumer/articles/Starbucks-stock-SBUX-Jamba- Juice-JMBA/3/22/2012/id/40032#ixzz2Tz21eNu7. Wolfe-Wylie, W. (2013) - Starbucks owns the city; Tim Hortons owns the highways: the Canadian coffee war is being fought in cities http://o.canada.com/2013/02/21/tim-hortons-might-control-the-highways-but-starbucks-rules-the-city/.