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Marketing Management

1. Construct the 4P’s of Marketing Mix for Starbucks Coffee chain in India along with the 3
extended P’s for Services.
Ans:
Introduction:
Marketing mix is the set of controllable, tactical marketing tools that the firm blends to produce
the response it wants in the market (Kotler and Armstrong, 2008). The marketing mix consist of
everything the firm can do influence the demand for its product. There are four variables known
as product, price, place and promotion.

 Product means the goods and services combination the company offers to the target
market.
 Price is the amount of money customers have to pay to obtain the product.
 Promotion means activities that communicate the merits of the product and persuade
target customers to buy it.
 Place includes company activities that make the product available to target consumers.

Marketing Mix of Starbucks analyses the brand/company which covers 4Ps (Product, Price,
Place, Promotion) and explains the Starbucks marketing strategy.
Concepts and Application:
Starbucks Marketing Mix:
Product:
Starbucks is the leading coffee chain brand globally. Starbucks provides an unbeatable and
unmatchable experience for the various products it offers. Although Starbucks’ specialist is
coffee, it should enter various other product categories in its marketing mix to attract all kinds of
customers. Starbucks outlets serve whole-bean coffee, hot and cold drinks, micro ground instant
coffee known as VIA, whole-bean coffee, caffe latte, La Boulange pastries, espresso, full- and
loose-leaf teas which includes Teavana tea products, Frappuccino beverages, Evolution Fresh
juices and snacks such as chips and crackers; seasonal or specific to store locality products like
Pumpkin Spice Latte. Many Starbucks stores sell hot and cold sandwiches, pre-packaged food
items and drinkware like tumblers and mugs; some "Starbucks Evenings" outlets offer wine,
beer, appetizers. Starbucks-brand ice cream, coffee and seal bottled cold coffee drinks are sold at
selected grocery stores as well. The coffees are categorized on the basis of:
 Format – Whole bean and VIA
 Roast – Blonde, medium, dark
 Caffeine – Regular, decaf
 Flavoured and unflavoured
Price:
Starbucks is clearly a premium priced coffee seller. The price is justified due to its high end
technology and the varieties it offer along with the best customer experience. To maintain
competition, Starbucks should start with a low cost range at few outlets and to cater the
customers who couldn’t be attracted by its high prices. The packaged products are also available
at grocery stores which are comparatively cheaper than the normal outlet products and easily
available to everyone. This proves that Starbucks not only follows competitive pricing in its
marketing mix but also relative pricing strategies. The drinks at Starbucks are also available in
various sizes as per the need and requirement of every customer with minute variations like
demi, short, mini, tall, grande, venti and trenta. The quality is always the highest, which helps in
maintaining a loyal customer base and brand name.
Place:
Starbucks is present more than 70 countries in Africa, North America, Oceania, South America,
Asia and Europe. Starbucks had approx. 5000 licensed locations. Maximum outlets are available
in USA. Starbucks have a well-designed website which contains information on each and every
aspect of coffee making, coffee varieties available, sourcing options – quality and farmer
support, find your own perfect coffee, flavour details, about espresso – ingredients, best
equipment and makers, brew coffee – how to, coffee press, pour over, iced pour over and coffee
brewer. The complete Starbucks menu, store options, locations, speciality stores, customer perks
and benefits, etc. are all available on the website itself.
Promotion:
Starbucks is a top of the mind brand through various activities and initiatives. Starbucks focuses
on brand promotion in its marketing mix through channels like online, TV, print ads etc. Even
though Starbucks has a wide range of customer network, it never falls back from its
responsibility towards its customers, benefits offered for the price they pay and giving back to
the society. Through its community programs for local communities, Swastha – healthy program
and Chai project, ethical sourcing options providing benefits to farmers, coffee, tea and cocoa
sourcing areas, environment friendly techniques – using recyclable cups, green building, etc. it
clearly displays the responsibilities and actions taken by the company.
Since this is a service marketing brand, here are the other three Ps to make it the 7Ps marketing
mix of Starbucks.
People:
Starbucks is a customer centric company and provides the best services and ambience to create
the most beautiful memories for any individual. The sophisticated ambience and setup
maintained throughout its stores anywhere in the world helps the coffee shop to stand above
other competitors. Starbucks also writes the names of every individual differently on the coffee
cups, which are intentionally spelled wrong in few outlets. Starbucks also has a lot of focus
towards its employees, which are more than 200,000 across the world.
Process:
Starbucks provides loyalty cards to its employees who are upgraded from time to time and it
helps in attracting the customers more and more. The supply chain from procurement of coffee
beans, to the delivery of coffee and other products in any store of Starbucks is well managed and
uses the highest technology to maintain the premium standards.
Physical Evidence:
Starbucks stores, ambience, coffee mugs/glasses with the logo printed, paper napkins etc all
come under the physical evidence of the brand. There were reports of many unbranded stores
which were inspired by Starbucks but later on either changed their names or took over Starbucks
itself. Starbucks also offers automated kiosks and machines in few locations where 280
combinations of coffees are available.
Conclusion:
Starbucks unquestionable is a successful company, within 40 years of short period it already
developed with an extraordinary business in the world. Furthermore, currently years of Starbucks
keep going to improve their product and also try hard to fulfill the consumer satisfaction. The
marketing mix of Starbucks coffee (product, price, promotion and place) using in the overseas
markets. Nowadays, Starbucks more prefer in selecting any location where around nook and
corner in every road of city. Starbucks also provide goods and services for every customers and
community for public who are coming to Starbucks for chat, meet up or even work.
2. You are the Chief Marketing Officer for Apple India. Conduct a macro external environmental
analysis on 8 factors & suggest whether India is an attractive market for higher range of iphone
devices such as iPhone 8, iPhone 8plus & iPhoneX?
Ans:
Introduction:
Macro environment consists of demographical, political, legal, culture, social, economic,
technological and natural environment.
Apple’s high performance is linked to the company’s effectiveness in addressing external factors
in its remote or macro-environment. The firm’s success is a result of various strategies created to
exploit opportunities and protect the business from threats. This PESTEL/PESTLE analysis
identifies the most significant external factors that Apple must include in addressing its remote or
macro-environment. These factors present opportunities or threats that impact the business.
Concepts and Application:
PESTEL Analysis of Apple Inc:
Political Factors
This factor shows the governmental factors that can influence the organization. This can include
– government policy, political stability or instability in overseas markets, foreign trade policy,
tax policy, labour law, environmental law, trade restrictions and so on. Concentrating on the
opportunities, free trade with the developing countries can be beneficial for Apple. The policy
can cater Apple with better opportunities for distributing its products in various
markets/countries.
In Apple’s case, the following are the most important political external factors:

 Improving free trade policies


 Stable politics in developed countries

Economic Factors
Most of the economic external factors in Apple’s remote or macro-environment create
opportunities. Factors include – economic growth, interest rates, exchange rates, inflation,
disposable income of consumers and businesses and so on. Additional range of economic factors
that impact Apple growth prospects include unemployment trends, labor cost, stock market
trends, interest rates, changes in prices of resources in general. The economic stability of
developed countries has a positive impact for the company as they can expand business across
the globe.
In Apple’s case, the following economic external factors are the most significant:
 Rapid growth of developing countries
 Stable economies of developed countries

Social Factors
Throughout the history, Apple has made changes in the two main factors, which are the design
and quality in order to satisfy the consumers and the customers. With the transformation in
education level, lifestyles, buying habits and life expectancy, the urge of purchasing expensive
products have risen in most to the markets; people have made Apple a status symbol. Apple inc.
is defining a individual’s modern lifestyle and the increased demand of Apple’s products has
assisted in formulating strategy to open franchises and make investments in developing
countries.
In Apple’s case, the following social or socio-cultural external factors are the most significant in
the firm’s remote/macro-environment:

 Rising use of mobile access


 Rising use of social media

Legal Factors
Apple has always being involved in legal proceedings and claims ever since it has started
operating. The claims include infringements of Nokia, HTC and Samsung patents. Going
through these claims, the company still doesn’t focus on legal issues. Though it is having a firm
strategy for anti-trust law and health and safety laws, but copyrights, patent and international
property laws are still a threat for the company. Employment and consumer protection laws are
few others to name that the company avail as an opportunity for their rationale growth.
In Apple’s case, the following are the most significant legal external factors:

 Increasing privacy regulations


 Increasing telecommunications regulations

Technological Factors
With the recent trend of smart phones and gadgets being the hot commodity, technological
factors for Apple’s market has grown subsequently. Being the innovators and always offering
unique and advanced technology, Apple needs to focus on the technological aspects of its
products i.e. the lifecycle. Though the company spends a lot on the research and development,
little efforts need to be made to track down the rate of technology change and the way
competitors are competing. The design and new inventions in technology has always being the
top priority for Apple, to achieve this aim the company needs more advance knowledge of the
changing trends of basic technology infrastructure level.
In Apple’s case, the following technological external factors are the most significant:
 Cloud computing trend
 Technological integration
 Growing apps market

Environmental Factors
Apple has always taken comprehensive approach to reduce environmental issues and take
environmental responsibility very seriously. It has not only reported for carbon footprints but has
also managed to reduce the footprints. The firm strategy includes disposing off the waste
properly, reduce air and water pollution. Not only this, but it is vigorously working in recycling
electronic equipment. With the emerging weather climate changes and laws regulating the
pollution associated with these changes, Apple is on track to consume energy from solar,
geothermal and hydro sources. The company viable approach to environmental issue is due to its
strategy for health consciousness that is being analyzed in legal and socio-cultural impacts.
In Apple’s case, the following ecological/environmental external factors are the most important:

 Business sustainability trend


 Product energy efficiency trend
 Labor rights trend

Recommendations based on Apple’s PESTEL/PESTLE Analysis


This PESTEL/PESTLE analysis shows that the majority of external factors in Apple’s
remote/macro-environment provide opportunities. Given the company’s current leadership in the
industry, Apple is positioned to exploit these opportunities. However, the firm must develop
suitable strategies to effectively address the threats identified in the legal dimension of its
remote/macro-environment. Based on this PESTEL/PESTLE analysis, it is expected that Apple
will remain in its leadership position for at least five years into the future.
Conclusion:
To conclude, Apple is a well-established firm operating from more than 40 years has a firm
grasp on all the aspects discussed in PESTEL analysis. It has always being innovative not only
with its products and ideas but also with its market strategies. Only areas that need attention are
the legal and political. Discussing the political area, to reduce the operating cost, it has
outsourced to various countries. An alternate needs to be planned with the intention of reducing
risk associated with outsourcing, import restrictions and trade control. And as for the legal area,
Apple is somehow involved in infringements of patent and copyrights. Although they have all
the bases covered, a little attention to the threats and opportunities can provide better market
position and help sustaining the “Leaders of Technology “label.
3. You are an Italian shoe making firm by the name of “Scarpa” & your target audience is
primarily middle class in Europe. You wish to enter the Indian market looking at India’s vast
middle class segment which is your intended target market.
a. Which one of the following pricing strategies would you wish to pursue in India? Explain the
reasons behind choosing this pricing strategy.

 Full Cost pricing


 Psychological pricing
 Premium pricing

Ans:
Introduction:
The pricing of any product is extremely complex and intense as it is a result of a number of
calculations, research work, risk taking ability and understanding of the market and the
consumers. The management of the company considers everything before they price a product,
this everything includes the segment of the product, the ability of a consumer to pay for the
products, the conditions of the market, action of the competitor, the production and the raw
material cost or cost of manufacturing, and of course the margin or the profit margins.
Concepts and Application:
Reasons behind choosing this pricing strategy:
Full Cost pricing:
Full cost pricing is also known as Cost plus pricing. Cost-plus Pricing is especially useful while
deciding Prices for public utility and for tailored or customised products. Product tailoring
involves determining the product design after the selling Price is determined. Cost plus Pricing is
also helpful for pricing products that are deigned to the specification of a single buyer.
Example: If a company sells a product for ₹100, and that ₹100 includes all the costs that go into
making and marketing the product, then it may add a percentage on top of that ₹100 as the
“plus” part of cost-plus pricing. That portion of the price is their Profit.
Psychological pricing:
Psychological pricing Strategies is an approach of gathering the consumer’s emotional respond
instead of his rational respond. For example a company will price its product at Rs 99 instead of
Rs 100. The price of the product is within Rs 100 this makes the customer feel that the product is
not very expensive. For most consumers price is an indicating factor for buying or not buying a
product. They do not analyze everything else that motivates the product. Even if the market is
unknown to the consumer he will still use price as a purchase factor.
Premium pricing:
Premium pricing is the practice in which a high end Product is sold at higher than that of
competing brands to give it a snob appeal through an aura of exclusivity. It also referred to as
skimming, image pricing or prestige pricing. The firm may decide to charge high initial Price to
take advantage of the fact that some buyers are willing to pay a much higher price than others as
the product is of high value to them.
Conclusion:
Pricing completely depends on the 4P pricing strategy in marketing which is very important and
it needs to be considered before pricing any product. The management of the company needs to
price their products and services very effectively as they do not want to enter into any situation
where their sales take a hit due to relatively high price when compared with their competitors,
neither would the company want to keep a price too low to maximize profits or enter into losses.
Hence pricing needs to be done very smartly and effectively making sure the management of the
organization considers every aspect before they price a product.
b. Given that Scarpa is a new entrant into India, describe atleast 6 innovative sales promotions
campaign aimed at Indian consumers.
Ans:
Introduction:
A promotional plan is an important marketing tool when it comes to launching a new service or
product or expanding your market reach into new verticals or demographics. A sales promotion
is any undertaking by an organization designed to increase sales or encourage the use or trial of a
product or service. Sales promotions take many different forms, but they all focus on persuading
a target audience to make a purchase or become a client of a business.
Concepts and Application:
Sales promotions campaign aimed at Indian consumers:
Determine Objectives
Keep in mind that Scarpa objectives in a promotional campaign are slightly different from its
marketing campaign. Promotional objectives should be stated in terms of long or short-term
behaviors by people who have been exposed to Scarpa’s promotional communication. These
objectives must be clearly stated, measurable, and appropriate to the phase of market
development.
Determine Promotion Mix
This is where Scarpa should need to allocate resources to sales promotion, advertising, publicity,
and, of course, personal selling. Don't skimp on either of these areas. Scarpa must create
awareness among their buyers for its promotional campaign to succeed. A well-rounded
promotion will use all these methods in some capacity.
Develop Promotional Message
It is the time that Scarpa should need to sit down with its team and focus on the content, appeal,
structure, format, and source of the message. Keep in mind in promotional campaigns appeal and
execution always work together.
Develop the Promotion Budget
It is the exciting part. Scarpa must now determine the total promotion budget. It involves
determining cost breakdowns per territory and promotional mix elements. Take some time to
break down allocations and determine the affordability, percent of sales, and competitive parity.
By breaking down these costs, Scarpa will get a better idea on gauging the success potential of
its campaign.
Determine Campaign Effectiveness
After marketing communications are assigned, the promotional plan must be formally defined in
a written document. In this document, Scarpa should include situation analysis, copy platform,
timetables for effective integration of promotional elements with elements in its marketing mix.
Implementation
Knowing Scarpa target market and its buying habits helps Scarpa decide on the best time to
implement its sales promotion. Scarpa promotion must also match up with its ability to provide
enough product to fill orders. If Scarpa use direct marketing tactics to get in front of prospects,
include enough time to test the piece so Scarpa can make changes that make the message more
compelling.
Conclusion:
A sales promotion campaign is generally designed to supplement advertising and facilitates
personal selling. It performs the immediate task of increasing current sales. It aids selling by
temporarily changing the existing price value relationship of the product. Sales promotion is a
direct and almost open inducement to consumers to immediately try the product.
Sales promotion refers to non-recurring and short-term sales activities other than advertising and
personal selling. Brand proliferation, trade pressures, growing competition recession, quick
returns, competent staff and attitudinal change are the causes of growing popularity of sales
promotion.