MKT 320-05: Principles of Marketing
Fall 2020
Project Report
(Version: September 21, 2020)
Process
For the Milestone #1, you will submit the first draft of your project report and the data
files (as Excel files). I expect each team to complete all the sections of the report. Then, I
will provide feedback on your report.
For the final project report, the requirement is that you will address my comments on your
work. The better reports are the ones that address my comments on the Milestone #1 work.
Guidelines and Suggestions
1. You need to explain how you reach conclusions about the marketing strategy of the firm.
This is relevant for all the Sections from Section #2 Target Markets to Section #8 Pricing
Strategy (as labeled below). For example, when you describe the target market of the firm,
you need to provide a basis for your description. Similarly, for the value proposition of the
product, you need to provide a clear explanation for why you think the firm is offering a
particular value proposition to its target market.
2. The better reports are the ones that clearly analyze the marketing mix strategy of the
firm and present areas of weaknesses or opportunities. Understanding what the firm does
with respect to its marketing mix is one part of the picture. The other, more important part
is about identifying the problem or opportunity areas.
3. Copying others’ ideas is the worst form of stealing because it is free-riding on other
people’s creativity. So, if you rely on an article, report or any other resource in writing your
report, you need to clearly and honestly cite that source in your report and provide the
reference for that resource. I reserve the right to assign a score of zero (0%) to all members
of the team if I detect plagiarism in any part of your report.
At the end of the day, I do not expect to you to come up with exceptional suggestions
about the firm (it would be fantastic if you did!) but I expect you to put in an honest effort
to write a solid report. It is very easy for me to assess how much effort (both quantitatively
and qualitatively) a team has put into to putting together their report.
Format
Cover Page
The cover page should provide the following information.
- The name of the firm you have analyzed
- The first and the last names of the team members
Executive Summary
The most important part of your report is the recommendations section . You need to
communicate the point of your analysis very effectively. The executive summary should
NOT be longer than one-page.
- What is the problem or opportunity for the marketing strategy of your product?
- What are your recommendations?
Sections
1. Brief Company Description - Haley
This section should provide information about the product lines of the firm. After
providing brief information about the product lines of the firm, you need to indicate the
product line you are focusing on. If there are multiple products and you are focusing on
one of the products in your report, you need to clearly indicate that.
Starbucks is the company that we were given to do a report on. This coffee company has a
very broad range of products ranging from iced to hot drinks. Their product line is as
follows, fresh brewed coffee, iced and hot expresso drinks, iced coffee, cold brew, nitro,
frappuccinos, Starbucks refreshers, and tevana teas. Their is a wide range of caffeinated and
non caffeinated drinks to suit everyones needs. But the product line that my tea and I are
focusing on is Frappuccinos.
2. Target Markets - Brennan
The target age of Starbucks’ market is 22 to 60, with the teen audience growing
steadily(Bean-Mellinger, 2019). Starbucks target market can be broken into five distinct
categories. Typically, a store can always be found near or close to an affluent
neighborhood. The target market for this category is high income (around $90,000) and high
spenders (Bean-Mellinger, 2019). These are the people who have no problem paying $10 or
more for a snack and coffee. The second category is the urban and on-the-go person. The
urban concept due to many stores located in the outlying suburbs of urban areas. Starbucks
also offers a convenient drive-thru and mobile app for online orders, they rely on the idea
that busy people need their coffee fix. The third category is professionals, students, and
technology adopters. Ever since offering Wi-Fi in 2002, the company’s on-the-go audience
has seen Starbucks as not just a pit stop, but as a mini-officer where they can set up their
laptops and attend to business while sipping their favorite beverage (Bean-Mellinger, 2019).
Health-conscious white-collared individuals tend to make up the fourth category. While the
health debate on coffee is still at large, a majority of the audience is white-collared
individuals who tend to stay up on trends, including health. Starbucks offers many options
including teas provided by Tazo and Teavana. The last category is the socially conscious
consumer. Starbucks has opened LEED-certified stores and they continue to push for
greener products for their cups and materials used (Bean-Mellinger, 2019).
You need to provide specific information about the target markets of the product.
The companies discuss the markets they target in their annual reports. You should do a keyword
search in the annual report using keywords such as “customer”, “market”, “segment”, and
“buyer”.
If you do not find sufficient information in the annual report of the company, then you should
review the promotional material of your firm (e.g., website, commercials)
You can check Chapter 9 in the 6th edition for examples of consumer segment descriptions using
various traits.
3. Value Proposition - Brennan
You need to explain the value of the proposition of the product. Please note that this discussion
has to incorporate the value the product offers to the target market. This is about how the firm
claims how its product is better than the competitors’ product. For further details on the topic,
you should refer to the discussion on positioning in Chapter 9 of the textbook.
You can check Chapter 9 in the 6th edition for examples of value proposition statements.
4. Product/Service Features - Haley
In this section you need to provide information on the product/service features. The more
relevant product/service features are the ones that are related to the value proposition of the
product/service.
5. Competitors In this section you need to provide information on the competing products of the competitors.
The better discussions are the ones that compare and contrast the benefits of the firm’s products
with that of the competitor’s products.
6. Marketing Channels - Haley
In this section you need to provide information on the types of marketing channels the
firm uses to reach its target markets. Is the firm using direct or indirect channels? If the
firm uses indirect channels, then you need to provide some information on the
middlemen that firm works with (e.g., specific retailers).
Starbucks uses multiple marketing channels to reach its target markets, from TV ads to social
media. Starbucks stays very consistent in their message to the customer which makes their
brand stand out even more. Starbucks’s message to their customer is “To inspire and nurture
the human spirit – one person, one cup and one neighborhood at a time.” Starbucks finds it
very important to build on their connection with their customer and employees which they
call baristas. Because the Starbucks target market is so broad they must use multiple
marketing channels to reach all of their audiences. Their largest target group is middle aged
working class men and women, the working class is their biggest target group because they
are consistently finding reasons to need coffee, whether that be to stay up for an early or late
night shift or just to get them through a regular business day. The middle aged men and
women are more pronned to be tuned into TV, newspapers, or billboard ads. The next biggest
target market is young adults between the ages of 15 to 25 which account for about 40% of
Starbucks sales. They use a direct channel to target this group which is mainly through social
media. Starbucks also tends to use more indirect channels such as retailers to reach their
target audiences like grocery stores and supermarkets that sell their prepackaged products and
house their kiosk starbucks stores. Stores like Harris Teeter, Publix, Wal-Mart, and Target all
sell Starbucks products. Starbucks makes makes their coffee not only store accessible but
also convenient for bringing home and making yourself. They are able to do this by
providing prepackaged coffee beans that can be ground to your liking in store, and they also
make instant frappuccinos in a glass for you to freeze when you get home so that you can
have an at home Starbucks frappuccinos. By doing this Starbucks broadened their marketing
channels and significantly increased their profit.
7. Integrated Marketing Communications In this section, you need to provide information on the promotion methods that the firm
uses. For example, does the firm use TV, newspaper, magazines, radio, online, mobile,
outdoor, or trade shows to promote its products and services?
8. Pricing Strategy - Matthew
In this section you need to provide information on the pricing strategy of the firm. For the
product you are analyzing, does the firm compete at similar, lower, or higher price points
than the competing products?
This discussion would be much more insightful if you provide information on the price of
the product you are analyzing and then compare it with the prices of competitors’
products.
Starbucks, as a company, appears to primarily follow a profit-oriented pricing
strategy. In their most recent 10-K financial report for the 2019 fiscal year
(https://www.sec.gov/ix?doc=/Archives/edgar/data/829224/000082922419000051/sbux-9
292019x10xk.htm), the company makes repeated references to achieving various
“performance goals”, and those goals are defined as follows:
“Performance goals are determined by the Board of Directors and may
include measures such as earnings per share, operating income and return
on invested capital.”
In addition, the aforementioned 10-K filing makes repeated references to the various
factors that could negatively or positively impact Starbucks’ profitability, including labor
costs, cost of ingredients, and supply chain optimization costs. This, in combination with
their focus on performance goals,
From Fast Food Menu Prices (https://www.fastfoodmenuprices.com):
Restaurant,
Product Line
S Price,
Size
M Price,
Size
L Price,
Size
Average Cost
Per fl.oz
Starbucks
Frappuccino
(basic flavors)
$3.25
12 fl.oz
($0.27/fl.oz)
$3.95
16 fl.oz
($0.25/fl.oz)
$4.45
24 fl.oz
($0.19/fl.oz)
$0.23/fl.oz
Starbucks
Frappuccino
(specialty flav.)
$3.95
12 fl.oz
($0.33/fl.oz)
$4.45
16 fl.oz
($0.28/fl.oz)
$4.95
24 fl.oz
($0.21/fl.oz)
$0.27/fl.oz
Dunkin’ Donuts
Frozen Coffee
$2.99
16 fl.oz
($0.19/fl.oz)
$3.99
24 fl.oz
($0.17/fl.oz)
$4.99
32 fl.oz
($0.16/fl.oz)
$0.17/fl.oz
McDonald’s
Frappe
$2.39
12 fl.oz
($0.20/fl.oz)
$2.89
16 fl.oz
($0.18/fl.oz)
$3.39
22 fl.oz
($0.15/fl.oz)
$0.18/fl.oz
9. Performance, Marketing Spending, R&D Spending - Matthew
In this section, you need to present the following charts
- Chart #1: Firm’s revenue, profit, marketing spending, and R&D spending. If data is
available for all four, then the chart should include all four types of data.
- Chart #2: Competitors’ revenue, profit, marketing spending, and R&D spending. If data
is available for all four, then the chart should include all four types of data.
- Chart #3: Present a chart that tracks the following ratio over time for the firm and its
competitors: Marketing Spending/Revenues.
You need to interpret the information on the charts.
Chart #1: Do you observe a particular trend in revenues, marketing spending or R&D
spending for your firm?
Chart #2: Do you observe a particular trend in revenues, marketing spending or R&D
spending for the competitors’? In terms of profitability, which firm seems to be in the
best position?
Chart #3: For your firm, is the marketing spending as a percentage of revenues increasing
or decreasing? You need to compare and contrast the firm’s spending trend with the
competirors’ spending trend as well.
10. Recommendations
What should the firm do in order to improve its marketing mix strategy? Do you observe
any specific problems in the marketing mix strategy of the firm?
If you are not able to identify a specific issue with the marketing strategy of the firm,
then the question is how can the firm do better? In other words, how should the firm
change its marketing strategy to achieve higher growth rates? Please keep in mind that
shareholders are investing in your firm to earn greater returns than other investment
options4
References
Bean-Millinger, B. (2019). Who is Starbucks’ Target Audience? Chron; Hearst Newspapers,
LLC. https://smallbusiness.chron.com/starbucks-target-audience-10553.html
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