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Course : Marketing
Course Code : N1DM04
Module Convenors : Nelson Oly Ndubisi
Assignment Title:
Exam Coursework : Marketing Plan For Starbucks VIA In Malaysia
ZHIJING, EU (UNIMKL-004151)
Date: 14th January 2010
COPY I
[Word Count : 2522 Words – Excluding Abstract , Section Headings , Table Headings
and Appendices]
1
Abstract
[141 words]
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Contents
1.Introduction........................................................................................................4
2.Market Evaluation...............................................................................................5
2.1 Market Environment Analysis.......................................................................5
2.2 Competitive Landscape For Instant Coffee...................................................7
2.3 Market Trends..............................................................................................8
2.4 SWOT Analysis..............................................................................................9
2.4.1Strengths.................................................................................................9
2.4.2Weaknesses..........................................................................................10
2.4.3Opportunities.........................................................................................10
2.4.4 Threats.................................................................................................10
3.Marketing Strategy...........................................................................................12
3.1Brand Positioning.........................................................................................12
3.2 Target Marketing........................................................................................12
3.3 Marketing Mix.............................................................................................12
3.3.1 Product.................................................................................................12
3.3. 2 Place/Channel......................................................................................13
3.3.3 Promotion.............................................................................................13
3.3.4 Price.....................................................................................................14
3.4 Implementation of The Marketing Plan.......................................................15
4.Conclusion........................................................................................................17
5. References.......................................................................................................18
6. Bibilography.....................................................................................................19
6. Bibilography
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Table 1. Marketing Plan Implementation Strategy Over Time
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1.Introduction
Starbucks in Malaysia is jointly owned by Berjaya Corporation and
Starbucks Coffee International and has enjoyed a healthy growth within
the Malaysian market since it’s first outlet opened in 1998. At present,
there are 119 stores thru out Malaysia (Starbucks Malaysia Website 2010).
In Berjaya corporation’s most recent 2009 Annual Report, it was stated
that there was a 14% increase in revenue from previous year due to the
continued growing acceptance of the brand and products as well as new
outlet openings.
This paper outlines the current state of the instant coffee within Malaysia
in context of a planned launch of “VIA”, Starbucks’s new line of instant
coffee thru the analysis of the potential market size, consumer
preferences, market segmentation and growth areas for the soluble coffee
market within Malaysia. The paper also analyses the local competition
scenario within the instant coffee market and recommends a marketing
plan to successfully launch and sustain the growth of VIA.
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2.Market Evaluation
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Figure 2. Coffee Consumption Relationship To Purchasing Power (Kendrik 2008)
The coffee market is a sub-set of the “Hot Drinks” market sector which
can be further categorised into instant coffee and ground coffee.
According to a industry report (BMI 2009), total coffee sales in Malaysia
total to approximately 61 Mil USD in 2008 and is set to be a growth
market as seen in Figure 1
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2.2Competitive Landscape For Instant Coffee
The threat of new entrants is high given that in the past few years,
many domestic players have entered into the instant coffee market.
Affordable pricing and localised products were identified by one industry
report (Euromonitor 2008) as key drivers for the increased prominence of
the domestic coffee brands.
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Industry rivalry is medium. Nescafe stands out as one of the major
competitors and is purported to currently command up to 70% of the local
Malaysian market share in the coffee segment (Adam 2009) and the
instant coffee market players have developed quite specific value
offerings based on the additional ingredients or style of coffee
preparation.
2.3Market Trends
The coffee market can be divided into consumers segment by where the
coffee is drunk , In-Home vs Out of Home ; and type of product , Soluble
(Instant) vs Ground coffee.
Three market trends worth noting are firstly the anticipated growth of the
out of home segment based on a recent study by Nestle (As reported in
Bernama Press 2009), where Malaysians currently spend 35 per cent of
their total food and beverage expenses out-of-home.
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2.4SWOT Analysis
STRENGTHS:
•Market leader with
sector in Malaysia
•Establish brand rec
Figure 5. SWOT Analysis On Starbucks For Instant Coffee Market
2.4.1Strengths
•Strong corporate i
such as VIA.
The core strength of Starbucks has been it’s ability to create a relationship
with the customer by marketing the “consumption experience”. As quoted
environmental stew
by the Howard Schultz, the CEO, Starbucks is not in the coffee business
serving people but in the people business serving coffee (Sellers 2005).
The challenge with VIA is whether the coffee “experience” can be mapped
onto a product which traditionally has been a low involvement product for
involvement
most consumers.
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strong corporate image due to it’s efforts in ethical sourcing,
environmental stewardship and community event involvement.
2.4.2Weaknesses
Starbucks is a late entrant into the soluble coffee market as this is a
crowded brandscape where there are many other brands in the market
both from international competitors such as Nescafe and also domestic
firms such as Old Town Coffee.
2.4.3Opportunities
The economic slowdown has not left Malaysia unaffected. Store on store
sales growth for Starbucks retail outlets were reportedly lower for the year
2009 and this trend is expected to be similar for the 2010 period (Berjaya
Corporation Annual Report 2009). Therefore the sale of instant coffee as
an alternative source of revenue for Starbucks can be viewed as an
opportunity for the firm to weather the crisis and at the same time extend
the product line.
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2.4.4 Threats
The launch of VIA carries the risk of jeopardizing the brand equity of the
core Starbucks brand as the growth of the soluble coffee market could
potentially cannibalise sales from Starbuck’s retail outlets who then go on
to switch to competitor instant coffee brands.
The extension of the product line into a new market may also cause a loss
of focus on the core business of retail brewed coffee if resources are not
balanced. This can be exemplified by the McDonald’s “McCafe” concept
store which has already been launched elsewhere in the Asia Pacific
region.
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3.Marketing Strategy
3.1Brand Positioning
The launch of VIA will need to be consistent with the brand positioning
objective to market it as a new and exciting innovative product that is an
equivalent substitute for freshly brewed gourmet coffee for people on the
move or working in locations remote from Starbucks retail outlets.
3.3.1 Product
The taste and convenience aspects of the product will be critical.Research
should be conducted in the trial phase to understand what features
consumers would value. For example, would solubility in cold water be
important and what packaging would be the most convenient (E.g. Fits
neatly in shirt pockets)
The level of product information will also be reduced from usual Starbucks
packaged coffee beans as typically less is said about ingredient origins for
instant coffee. The packaging should also highlight the innovative
microground process.
Sizing should be via an easy to tear “stick” sachet with multi-packs sized
for travel. It will be unlikely that VIA will be offered in loose power “jar”
packaging as this does not fit the “on the move” image.
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Given that the only flavours available are Italian Roast and Colombia there
is a temptation to extend the flavours offered but a counter positioning of
simplicty in offerings could be used to address this issue.
3.3. 2 Place/Channel
Within Starbucks Malaysia, there is no direct merchandising or distribution
experience outside of the retail outlets .However Berjaya Corporation ,a
major shareholder in Starbucks Malaysia franchise, should be able to
leverage on it’s extensive businesses experience elsewhere within the
food and beverage sector to make headway into new distribution
channels.
3.3.3 Promotion
Initially, during the launch stage, secrecy and speed will be key to success
to avoid pre-emptive moves by other brands such as Nestle who would
already have developed retaliatory strategies elsewhere.
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market (Shah 2009) to achieve this sense of coffee experience has been
the taste test and free samples.
Further down the road, there is also a chance for Starbucks to leverage on
it’s corporate identity by integrating VIA into it’s larger scope of
environmental stewardship by creating a recycling campaign around the
product.
3.3.4 Price
At present, there are no equivalent premium instant coffee products at
which to benchmark a suitable price for Via. A cursory survey of prices at
local supermarkets seems to indicate that premium coffee tends to be of
the “roast and ground” variety.
A pricing strategy that offers rewards for loyal Starbucks customers would
work well to cement the relationship between the instant coffee and retail
brew sectors. This could be a simple modification of the loyalty card
system that is already in place at the retail outlets or this could work in
reverse where customers are offered complimentary drinks if they collect
enough VIA wrappers.
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3.4 Implementation of The Marketing Plan
The marketing plan is outlined briefly in the Table 1 below.
• Survey the market to identify the • Price skimming - Premium pricing • Price skimming with potential for • Maintain the price skimming strategy
price ranges within the instant that will set it apart from other discounts related to purchase of with flexibility for price changes
coffee market economy pack brands main Starbucks products depending on competitor reactions
Price
• Maintain secrecy and speed of • Free samples in stores • Consistency in messages and • Integrate the brand image of VIA
the implementation to avoid • Taste tests monitoring impact on retail stores with the parent brand in terms of CSR
retaliatory attacks • Leverage on the online activities
Promotion community presence
• Explore and develop distribution • Exclusive Distribution - Offer VIA • Selective Distribution - Offer at • Maintain Selective Distribution
channels available to the Berjaya exclusively at Starbucks retail "premium" supermarkets
parent company outlets
Place/Channel • Other channels should match the
"on the move" element
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The implementation of the plan relies heavily on the appropriate allocation of resources , monitoring of progress
and ensuring that there is sufficient flexibility to cope with the anticipated competitor reactions against the
introduction of VIA by either emphasing their lower prices , discrediting Starbuck’s claim of equivalent quality or
promoting their larger product flavour range.
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4.Conclusion
The instant coffee market within Malaysia is an attractive area for
Starbucks to enter into. However the key risk that needs to be managed
within the market mix is the dilution of the brand identity as Starbucks
has always been associated with premium coffee and this is in contrast to
the instant coffee market which has traditionally been viewed as “down-
market” of the gourmet market.
This move would develop the demand for gourmet coffee and capture the
instant coffee drinker market as well as serve as a revenue buffer for the
core business of retail brewed coffee. With the right marketing strategy,
there is the potential to capitalise on Starbuck’s brand equity to extend
the product successfully.
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5.References
• Adam ZR 2009, 18th June, Nestle: Coffee is good, thanks to the antioxidants,
Available From
<http://www.btimes.com.my/Current_News/BTIMES/articles/nescdf/Article/ind
ex_html> [ Accessed 13th January 2009]
• Andrejczak A 2009, 18th November , Instant-coffee war: Nestlé takes aim at
Starbucks, Available From <http://www.marketwatch.com/story/instant-
coffee-war-brewing-nestle-vs-starbucks-2009-11-18> [ Accessed 13th January
2009]
• Berjaya Corporation , Annual Report 2009 , Available From
<http://www.berjaya.com/annual2009.htm> [ Accessed 13th January 2009]
• Bernama Press 2009, 13th October, Nestle Seeks To Double Share In Out-Of-
Home Market , Available From
<http://www.bernama.com/bernama/v5/newsbusiness.php?id=446642>
[ Accessed 13th January 2009]
• Business Monitor International 2009 , Malaysia Food & Drink Report Q4 2009,
Available From <http://digitalibrary.mida.gov.my/equip-
mida/custom/indReports/agro/2009/FoodDrinkReportQ42009.pdf> [ Accessed
13th January 2009]
• Chan J 2009, 19th November, New range of Malaysian-style coffee launched ,
Available From <http://thestar.com.my/metro/story.asp?
file=/2009/11/14/central/5102621&sec=central> [ Accessed 13th January
2009]
• Euromonitor 2009 , Hot Drinks in Malaysia 2009 : Executive Summary ,
Published May 2009 , Available From
<http://www.euromonitor.com/Hot_Drinks_in_Malaysia?print=true>
[Accessed 13th January 2010]
• Kendrik F 2008,Nescafe Presentation To Investors, Available From
<http://www.nestle.com/Resource.axd?Id=B65395A2-C76C-42B2-A7D6-
6648A3A66BF5> [Accessed 13th January 2010]
• Nestle Professional Website : Health & Nutrition : Antioxidants, Available From
<http://www.nestleprofessional.com/Australia/en/Insights/HealthandWellness/
Pages/Antioxidants.aspx> [ Accessed 13th January 2009]
• Norimah AK et al 2008 , Food Consumption Patterns: Findings from the
Malaysian Adult Nutrition Survey(MANS), Mal J Nutr 14 (1): 25 - 39, 2008,
Available From:
<http://www.nutriweb.org.my/publications/mjn0014_1/mjn14n1_art2.pdf>
[Accessed 13th January 2010]
• Roe A. 2009, Jun 8 , Starbucks and Nestlé become instant enemies , Available
From <http://www.komonews.com/economy/47066722.html> [ Accessed
13th January 2009]
• Sellers P 2005 , “Starbucks , the next generation” Fortune 4/4/2005, Vol 151,
Issue 6 p20
• Shah A, 2009 , Inside The Mix - Starbucks strives for instant gratification with
Via launch, Available From <http://www.allbusiness.com/marketing-
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advertising/marketing-advertising-channels/13550953-1.html> [ Accessed
13th January 2009]
• Starbucks Website 2010 , Starbucks In Malaysia , Available From
<http://starbucks.com.my/en-US/_About+Starbucks/Starbucks+in+
%28your+country%29.htm> [ Accessed 13th January 2009]
6. Bibilography
• Ching LH (1990), Coffee Products Sdn Bhd in JA Quelch, SM Leong, SH Ang
and CT Tan (1996) Cases in Marketing Management and Strategy- An Asian
Perspective , Prentice Hall Singapore
• Gbadamosi A. 2009, Low-income consumers’ reactions to low-involvement
products, Marketing Intelligence & Planning Vol. 27 No. 7, 2009 pp. 882-
899
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