Organizational leadership Assignment

 Introduction

This Organizational leadership Assignment is aiming to critically evaluate the statement “Transactional leadership has no place in a contemporary organization”. It appears that this statement is largely true and applicable in the present business environment. This assignment would define and explain the terms like transactional leadership and also provide an academic back up for the statement and its applicability. This assignment would also explore the opportunities where business leadership approaches can be applied in an organizational setting. A comparative evaluation between types of leadership broadly would be done as well to provide context to the assignment.

Leadership refers to the concept of “organizing a group of people for the accomplishment of a task”. Chemers, (1997) describe leadership as “a social influential process in which an individual is able to get the support of other people to complete a task or activity”. Leadership can be broadly classified as a transformational leadership and transactional leaders. According to Gao, Janssen, & Shi, (2011)  Transactional leadership can be defined as “Style of leadership that is based on the setting of clear objectives and goals for the followers as well as the use of either punishments or rewards in order to encourage compliance with these goals’’.

Body Of Essay

A leadership style decides the way all employees are lead makes a lot of difference in the way they perform. It makes an impact on their innovative approach, their ability to think out of the box, their decision making power and their job satisfaction level. Leadership approach can be of a transformational leadership and transactional leadership in an organization by a leader. Other than this there is one more way to classify leadership styles. This leadership classification states that leadership could be classified as autocratic, democratic, Laissez fare, Charismatic leadership, authoritative leadership etc. (Goddard & Melville, 2004). The different type of leadership styles has their own advantages and disadvantages.

A transformational leadership aligns itself with the change needed in an organization. It identifies the change and its importance, then it motivates and encourages employees to share the vision and align their own efforts and activities towards that change. A transformational leader usually provides the association with the positive outcomes and it also ensures that other than reward and punishments there should be motivating factors which can encourage employees to reach out beyond the call of their duty and bring changes. It’s not necessary that a leader will have formal authority in leadership. The leader may or may not have any formal authority. Research has been going on for centuries to find out the true qualities/characteristics of a leader (Wong & Laschinger, 2013).

In modern business environment change is the only constant and the globalized business model ensures that the business environment stays dynamic all the time. There is always a new invention which can obsolete the previous version or there could be a technological breakthrough which can obsolete an existing technology immediately. One good example of such absolution is the usage of film role based camera which was vanished in a small period of time with the arrival of digital cameras. Companies like Cannon, who transformed themselves with changing technology survived and gained competitive advantage while companies like Kodak who did not make a change because their leadership could not envision the needed changed perished into bankruptcy. Any organization which is contemporary in nature is moving so fast ahead in the business world that even if a company stops itself in current position, they start losing or going backwards because no one else is stopping. It is now a snowball effect of the contemporary organizations have a transformational leadership style on the roll. Leadership is aspect of an organization which can facilitate the changes and make the entire organization much more contemporary, open and progressively adapting to the changing times. This right leadership is one of the most important factors in developing better Job roles, work environment and job satisfaction in nursing profession (Wang, et al. 2011).

Miner (2015) has pointed out that a motivated staff is not only likely to offer higher quality and quantity of work, but also have the interest of the organization at heart, hence are willing to undertake any activity that will ensure the highest level of performance is reported. Leadership behaviours have been associated with the motivation of employees, however, there is contradictory findings obtained on the nature of the influence with some scholars stating that effective leadership is likely to motivate the employees while others asserts that the nature of leadership within any organization has minimal effects on the employee motivation (Miner, 2015). It is expected that collaboration, inspiring and motivation of the staff, developing others and having a strategic perspective in work are the major leadership behaviours that are likely to be reported amongst the leaders to the firms with transformational leadership style. In addition a higher extent of employee motivation and performance is likely to be reported in organizations where the above leadership behaviours have been effectively executed.

Situational leadership as described by Hersey and Blanchard also plays a very strong role here.

According to this theory each situation requires an analysis before the leader can decide what should be the amount of guidance and direction required in it. It is broadly divided into two axis of behaviour namely task behaviour and relationship behaviour. Each situation lies in different coordinates of these axis and according to its position on the axis its response can be decided by a leader. There are four common and critical competencies which a situational leader demonstrates namely diagnose, adapt, communicate and advance. There is no single best style of leadership which can be used a sa uniform approach to leadership. According to this theory in different situation different styles of leadership are best suitable. This theory is in contradiction with the statement made above prima facie but on analysis it can be observed that current external environment is dynamic in nature and that is why transactional leadership is not applicable in current situation making it obsolete for modern organization.

The adoption of effective leadership behaviours in the management of the employees is therefore likely to enhance the motivation of the employees as well as increase their performance. From this theoretical perspective, it is hypothesized that effective leadership behaviours enhances the motivation and performance of the employees. Gao, Janssen & Shi (2011) have, however, pointed out that as much as the above identified actions of a leader are likely to contribute towards the motivation of the employees, there are certain behaviours that when enhanced will have a higher significant effect than the others. For instance, increasing the level of collaboration, supporting the employees and motivating them are likely to have a higher level of motivation of the employees. Based on this assertion, there are certain leadership behaviours that have significant effects in the enhancement of the employees’ motivation and performance (Montana and Charnov, 2008).

People set the tone for the culture of the organization which ultimately determines how much successful an organization is. To manage people effectively and to retain them with an organization, an organization needs effective leadership (Bennis, 2007). Thus, it is very much relevant in contemporary business environment that organizations who are on a growth pattern and do not want to lose their focus on improvement should follow the transformational leadership approach only. Leaders can only succeed if they know which leadership style (task, motivated/leadership motivated) to practice in which situation. Hence, effective leaders should practice a mix of task oriented and relationship oriented leadership style depending on which leadership style works best in a particular situation (Spillane, et al. 2004).

Another difference between a transformational leadership and transactional leadership is that a transitional leadership just communicates the vision of an organization to the middle and lower level employees while a transformational leader would keep a two way communication with all, he would not just communicate the vision, but he will live the vision of the company and present himself as an example to all so that they can be brought on board for changes. Transformational leaders find the best people for the task and play a very active role in effective development. They know that value for an organization can only be created if best people are put into a task. Not only do these employees create value for the organization, they also create value for themselves, which help them on the personal and professional front.

The decision making process of a transformational leader is also much better in today’s complex organizational structure and business environment where consideration and choice of employees, consumers are equally important. They understand that value is not in individual success; but rather the value is in the success of the organization and in the success of employees working in the organization (Berdahl & Anderson, 2005).

Conclusion

In conclusion, it can be said that being aware of an organization’s values is one thing and practicing them in day to day work is an entirely different thing. Knowing the organization’s values help to align one’s work with the values and create desirable value for the stakeholders. A transformational leadership is always working towards unlocking more value out of every level of the value chain. A lot of decision making is involved for managers in today’s corporate world. They have to take difficult business decisions like how to align daily work with the company’s strategy, how to create value for the stakeholders, how to play a part in the organization’s growth, etc.

Leadership refers to the concept of “organizing a group of people for the accomplishment of a task”. It’s not necessary that a leader will have formal authority in leadership. Effective leadership is often considered a competitive advantage of an organization and successful organizations focus a lot on effective leadership. This a transformational leadership is needed to properly manage the resources in an optimum manner to enable organizations to achieve success and with this evidence backed reasoning, it would be fair to say that Transactional form of leadership is not applicable in case of contemporary organizations.

References

• Bennis, W. (2007), “The Challenges of Leadership in the Modern World”, American Psychologist, Volume 62, Issue 1, pp. 2-5.
• Berdahl, J. L., & Anderson, C. (2005) Men, women, and leadership centralization in groups over time, Group Dynamics: Theory, Research, and Practice, 9, 45-57
• Chemers M. (1997) An integrative theory of leadership. Lawrence Erlbaum Associates, Publishers
• Goddard, W & Melville, S 2004, Research Methodology: An Introduction. 2nd Ed. Lansdowne: Juta & Co. Ltd. Last accessed 06 June 2014.

Organizational leadership Assignment

Elements Marketing Process Assignment

Introduction

Principles of marketing are used to promote the products to the users. Starbucks Corporation is the largest coffee house globally with stores in 64 locations. It is based in Seattle, Washington and was founded in 1971 as a local coffee shop by Jerry Baldwin (Starbucks: Our Heritage, 2014). The company is successful in rapidly expanding its base from United States of America to other countries. A part from selling tea and coffee the corporation ventured into selling food items, mugs and tumblers, marketing of films, books and albums etc. through its outlets. Starbucks has established its brand image by constant renovation and innovation in its stores and products respectively (Starbucks, 2014). The local flavour and culture in the coffee shop has contributed to attract local customers.

Task 1: Concept and process of marketing

LO 1.1: Elements of marketing process of Starbucks

According to the Chartered Institute of Marketing, the marketing process is concerned with developing a positive image of a product when used by the customer. It requires a considerable amount of planning to produce right products in right quantity at right place and right time (Baines, Fill, & Page, 2013). American marketing association refers marketing as an activity of considerable value to buyer, clients and society to develop, communicate and exchange goodies (Kotler P. , 2008). The key elements of marketing process are suppliers, company, competitors, marketing intermediaries and consumers.

SWOT Analysis Starbucks

The need and evaluation of SWOT is important to facilitate quick penetration in market where business is to be operated. The strength of Starbuck lies in its global presence, product innovation, quality and profitable business. Based on strengths Starbucks can use it for advertising purposes and weaknesses can be rectified and then can be represented as the improvement in product. Opportunities will help Starbucks identify the locations where extensive marketing planning will give positive impact. It will also help in providing auxiliaries to the customers like selling entertainment related goodies and also in expanding business globally (Starbucks, 2014). The threats in the form of external factors affecting business will help Starbucks in taking up conditions that are beyond its control. The threats are seen in the form of rising cost of dairy and coffee products, competitors coming up with similar model of marketing and product brands as well as younger generation inclined towards fizzy beverages rather than coffee. The SWOT analysis of strengths, weaknesses, opportunities and threat of Starbucks will help the company in setting goals for future.

LO 1.2: Benefits and costs of marketing orientation

The market orientation refers to aligning the company structure and culture to provide excellent value and satisfaction for its customers and efficient performance by the corporation. Here the company’s primary focus is to learn about the consumer needs rather than product innovation (Pride & Ferrell, 2007). It requires high degree of market research and intelligence to respond in a quick and timely manner to customer needs which will go long way in developing relationship with the consumer..

Companies become market oriented to avoid business loss. The benefit of research on marketing orientation has led Starbucks to revamp the brand by enforcing new strategies to reduce the risk of upfront investment by forging partnership model, reinvigorating coffee brand, selling instant coffee and other products from retail stores. The cost of marketing orientation for Starbucks will be huge if it hires private company’s services. This can be reduced by taking consumer surveys when a customer visits the shop. For market orientation activities, a company requires significant costs in building technical infrastructure and resources (Sahaf M. , 2008). The company needs to collect, analyse and use customer opinion and data to create business strategy which will fulfil customer needs of care, quality and service.

The benefits and costs of marketing orientation for Starbucks is that it helps in focussing all employees at all levels to customer centric approach. It helps in obtaining immediate feedback and adapt to the market changes as required by customers in terms of products or changing tastes (Starbucks, 2014). Market orientation has helped Starbucks to include local flavours menu.

Task 2: Concept of segmentation, targeting and positioning

LO 2.1: Micro and macro environmental factors influencing marketing decisions

Micro environment are the internal factors studied theoretically using Porter’s five forces of analysis (Murray- Webster, 2010). These five forces are competitors, bargaining power of buyers, bargaining power of suppliers, threat of new entrants and substitutes.

Microenvironment of Starbucks

Analysis of three micro environmental factors for Starbucks:

• Threat of new market entry: for Starbucks, threat of new entrants is low, due to its high influences of market saturation. This fact acts as entry barrier discouraging access to distribution networks because most visible and high traffic locations for setting any new coffee outlets are pre-occupied by chains of Starbucks due to their strategic approach “Starbucks Everywhere”. Also, to compete and capture sizable markets as new entrants against Starbucks would mean huge initial capital which is another noticeable barrier. Further, as customer switching costs for Starbucks are absent that means to attract their customers by a new entrant would mean addition barrier.
• Threat of substitutes: For Starbucks threat from substitutes products or services are negligent because they have wide portfolio of products in non alcoholic category covering almost the entire ranges of beverages such as tea, coffee, juice, energy drinks and drinking water. So, these core products do not face substitute threats directly. Whereas, indirect substitute services for Starbucks such as recreational centres, activity stores, theme parks and malls etc contribute insignificantly as threat.
• Competitive Rivalry: Starbucks faces intensive competition from similar industry firms such as Costa coffee, Caribou, Dunkin Donuts and McDonalds etc in addition to local cafeterias.(Starbucks Corporation Report, 2015)

Macro environment refers to factors like political, technological, environmental etc. (Kotler P. , 2008).

Macro environment of Starbucks

The three macro environments factors that affect the Starbucks are political, economical and social.

• Political factors: Starbucks business operations are influenced by political factors such as the procurement of raw materials which is dependent on stricter norms based on environment and social compliance. Engaging into these norms for sourcing their raw materials is compulsory for Starbucks. Any kind of negligence creates intense political pressure affecting their sales and revenues. Also, Starbucks global image got tarnished when it was charged for tax scandal by UK government. Though the matter settled in Dec 2014 with Starbucks paying £ 20 million to government, but this attitude from government created negative impact on Starbucks. Another example of impact of political factor is the debate and criticism faced by Starbucks on their gun policy issues. In year 2013, Gun Control Advocacy Group led a boycott against Starbucks appealing public to avoid visiting their stores on Saturday’s in US. This incident has hit Starbucks business. Other political pressures are business relationship of Starbucks with countries from where supplies of coffee beans are sourced. The stability of political terms with these countries affects Starbucks trade.
• Economic factors: Starbucks business is even influenced by economic factors. Example, the recession during year 2007-09 globally affected the consumer buying power, thereby decreasing Starbuck’s sales and dropping their revenues by 28% in 2008. This crisis situation even led to closure of 900 Starbucks stores and job cuts of about 6,700 staffs as an overall impact. Another influence is of currency exchange rates. Example, the current strengthening of USD has dropped its global revenues by 92 million during first quarter 2015 generating weak revenues compared to local foreign currencies.
• Social factors: Starbucks faces influences from social factors directly such as by increase in interest in adopting western and European culture and lifestyle, the sale of Starbucks has grown. Teenagers and earning youths in developing countries prefer to socialise in Starbucks outlets. This shift in consumer perception and social attitude shows growth prospects for Starbucks revenues. Another negative influence can be seen from growing concern for caffeine and sugar consumption. This health consciousness can lower Starbuck’s future business by shifting consumer preferences. (Starbucks Corporation Report, 2015)

 LO 2.2: Segmentation criteria for Starbucks

Market segmentation helps a company to identify its consumer base by segregating market into segments based on buyer needs and preferences (Ferrell & Hartline, 2012). The segmentation can be broadly classified as macro segmentation and micro segmentation.

Macro segmentation keeps size of organisation, its placement and the kind of industry it is part of in mind. The business attitude changes according to geographic placement of the business like America, Europe, Asia or Middle East based on the cultural preferences. Demographic segmentation relates to age, sex, family, education, social status, religion, income, nationality etc. Psychographic segmentation refers to lifestyle trends and personality traits. Behavioural segmentation tries to understand the response of buyer towards existing and new products like loyalty, readiness, attitude towards product (Ferrell & Hartline, 2012). Multi-variable approach uses different variables to increase the target base which can be differentiated, measurable, actionable, accessible and in substantial amount.

Micro segmentation is the nerve of daily business which makes decisions on quality of product, its delivery, pricing strategy based on location, suppliers and the technical requirements (Ferrell & Hartline, 2012). Macro segmentation will prove beneficial only if micro segmentation is effective .Evaluation of market segments to select one or two is a complex decision making process in the light of several vital factors associated with business.

Evaluation of different markets reveals that younger generation in the group of 18-24 years old constitutes the largest segment which loves Starbucks for their needs of energy boost or concentrate on studies (Starbucks, 2014). So younger generation and geographic location to include local flavours are the two market segments in which Starbucks can work upon.

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LO 2.3: Targeting strategy for Starbucks

Targeting refers to selecting consumer market with characteristic products that will fulfil desire of a set of consumer sharing similar needs and tastes. (Ferrell & Hartline, 2012)

A company offering several products among different market segments can decide on whether to offer one common product which is the case in mass or undifferentiated marketing (Czinkota & Ronkainen, 2012). In differentiated or multi-segmented marketing each segment depending upon diversity, maturity, profit and competition receives suitable product. In concentrated or niche marketing company focuses on selecting single segment, studying its behaviour and developing products accordingly. Cost benefit analysis must be done before selecting a targeting strategy.

For Starbucks the different markets present are in the form of consumer loving gourmet coffee, regular drip coffee, bottled coffee, diet coffee with lesser calories, non-coffee products like tea, smoothies etc. (Starbucks, 2014). The target market proposed for Starbucks vary demographically depending upon customer age such as adults (age 25-40), young adults (age 18-24), kids and teens (age 13-17). Example, Starbucks can target these different audiences by applying different strategies. Like, for adults who consists of 49% of Starbucks revenue generation, they can lay focus on planning interiors for Starbucks stores which should promote warm, cosy and status conscious ambience. The store decor should reflect urban lifestyles and trendy patterns. For young adults which generate 40% of Starbucks business, they can promote their outlets as social hangout places. This technology freak group can be targeted when appealed by infusing new tech gadgets and applications in Starbucks business process. Starbucks can promote cool and trendy image to target this audience. For kids and teens Starbucks can bring special sized products in small portions or popular products targeted on tastes and flavours such as different flavoured milks, shakes etc that can be enjoyed by kids with complementary merchandise like small toys, games etc. (Farrell, 2015)

LO 2.4: Buying behaviour and marketing activities

Buying behaviour is the study of consumer behaviour and the processes they use for purchasing and using goods. Marketing activity has a significant effect on the buying pattern of individuals or groups (Strydom J. , 2005). For developing marketing strategy in a business understanding of consumer purchase decision is essential.

Buyer behaviour depends on various environmental factors like cultural, social, personal, psychological etc. (Saxena R. , 2010). Cultural factors relate to inherent values which play a role in decision making. Social factor considers external influences like family and friends affecting decision making. The age of consumer, occupation, monetary condition, personality and lifestyle comes under personal factors. Psychological factors constitute attitude, motivation and perception towards trying a new product.

Marketing activities should be coordinated to influence buyer’s behaviour positively and encourage them to buy new products. Example of buyer behaviour and buying situation:

For calorie conscious people, nutritional information will help them in choosing products. Globally the population is becoming health conscious so fat less products are a hit with youngsters and adults alike and Starbucks can make it, its own strength. They can include flavours and products that are made from low-fat or toned milk. Also, they can use more healthy coffee variants like “clear coffee” which is appealing to health as well as keeps way tooth stains. Starbucks can also choose to offer healthy milk options against cow’s milk like soya milk, almond, rice, quinoa etc to position new health conscious products in addition to  their traditional varieties.

Similarly for families with kids, non coffee drinks in the Menu will help. With strategic location planning, used by Starbucks the addition of leisure games at outlet will be an added attraction for kids. Also, to keep kids engaged who accompany their parents the Starbucks stores can plan to have more of open spaces or play zones in addition to their convenient zones.  (Starbucks, 2014).

Another example of Starbucks approach for customer buyer behaviour and its marketing activities can be seen from its “my Starbucks idea” campaign. The idea behind this was Starbucks initiative to connect with its customers on active social networking to learn about their preferences and expectations. This campaign has helped Starbucks modify and experiment with their product offers depending on consumer change drive. (Peha, 2010)

To remain profitable Starbucks need to employ business tactics that will attract consumers to Starbucks franchisee locations.

LO 2.5: New positioning for new product or service

A new product or service needs visibility in the market thus the need of positioning arises to give extra thrust to new product (Ferrell & Hartline, 2012) Strategic positioning is essential to remain profitable in market and requires deep analysis of market to understand the consumer needs and offer a product which stands out in market.

Starbucks has positioned itself as high end quality products chain. It is one of the most successful coffee chains globally. They have tried to include local flavours as its main strategy to remain competitive and profitable. The Starbucks outlet locations like airports, busy junctions, and crowded markets are so selected that they receive maximum foot fall. But the prices of their products are tilting towards higher range when compared to competitor’s products (Starbucks, 2014).This approach repels consumers searching for reasonable prices and too many options available to them.

So the proposed approach for positioning of new products by Starbucks is to be reasonably priced at least in college campuses where they cater to younger generation who is mostly in college and looks for variety in the given budget. The outlets in office areas can be made inviting by providing privacy and keeping take away products so that consumer can have it in a go in fast paced life. Health conscious people opt for low calorie products so offer something which is sweet in taste but sugar free as well as low in dairy fat. The advantages of coffee like anti-oxidant, stress buster and anti-cancerous activity can be highlighted in stores and products. This approach of slim concept with medicinal advantages will attract all generations young, middle and elderly equally towards the product.

Elements Marketing Process Assignment

Task 4: Marketing mix

LO 4.1: Marketing mixes for two different segments

Marketing mix as the name suggests is a strategy used to market a product by a company. Marketing strategy undergoes variation based on the market segment it aims at.

For Starbucks two vital market segments are youngsters in the age group of 18-28 years old and slightly older office going generation in the age group of 28-40 years (Starbucks, 2014). Coffee is the kind of product liked by both men and women alike.

The younger generation is more outgoing and likes to indulge in group activities. They have penchant for latest music and movies. This means Starbucks outlet can include some leisure activities that can be played or enjoyed in a group like organising or sponsoring fashion shows, college festivals, sports and other entertainment activities. The outlet can sell CDs and DVDs and keep LED or LCD monitors showcasing programs liked by youth. Youth gets attracted towards low prices, discounts, freebies and other means of promotion so special offers can be given to them. These joints can suitably be located in college campuses, malls and can be promoted through social media and online retailers.

The family people will be attracted by menu which has things to offer for kids so Starbucks can embrace things liked by kids in their menu to attract them. The elder group prefers mild sugar with fewer calories as they are more health conscious so nutritional information is vital to them and Starbucks can include that in menu or otherwise communicate effectively by staff. Excess of discounts or offers may repel these customers as they create a negative image about the product. Starbucks outlets can be located in office complexes, super markets, hospitals, amusement parks etc. (Starbucks, 2014). This group may be attracted towards activities related to parent and child.

LO 4.2: Marketing products and services to businesses rather than consumers

Marketing products to other businesses like whole seller or retailer requires thorough planning and lucrative schemes (Ferrell & Hartline, 2012). It involves higher volume of transaction so businesses employ several managers to think and plan about business before testing waters.

For Starbucks marketing product to consumer is totally different from marketing it to businesses. In business to consumer system customer is the sole decision maker while in business to business system a group of people are decision makers where each one will have their own ideas about the brand (Keillor B. , 2007). So the process of decision making is also elongated in business to business marketing. This type of marketing calls for long term partnership as lot of money is at stake and changing brands by businesses frequently is not feasible. Starbucks had been successful in exploring business to United Airlines flight, distribution through supermarkets, coming up with coffee ice-cream with Dreyer’s and selling CD’s through its stores. It involves effective communication in the form of trade shows, websites, public relations, direct mails and last but not the least advertising.

Business to business marketing generally occurs between resellers, not for profit organisations or the government bodies. It is also called as organizational marketing. The tangible and non-tangible aspects of business need to be clearly explained beforehand (Keillor B. , 2007). Starbucks marketing product or service to businesses requires incorporation of value added services along with the quality of product so that it can be passed on to the consumer.

Marketing products/services to B2B

Marketing products/services to B2C

Product: B2B companies can also learn about purchase patterns of their business consumers through integrated technology tools to suggest and cross sell products. Example, automotive distributor company can monitor the purchase pattern of retailers to offer them with bundled products like free product servicing after initial purchases. Price: B2B companies also chose to price differentiate on commodity or situation. Example, auto distributor company can charge prices based on urgency of supplies or distribution channels. Place: B2B markets mostly choose traditional ways to establish their presence in markets. They can go for conventional ways. Example, auto distributor can chose to establish e-commerce sites to target their business clients. Promotion: B2B companies do not have frontline people engaged in strategic promotion of products. Example, auto parts Distributor Company can choose to inform product details directly to frontline staff to help business clients decide on purchase based on their objectives.

Product: B2C companies market their products based on previous history of consumer purchases. They give suggestions which may be of interest to consumers appealing them for repeat purchase. Example, Starbucks can keep a track of their customer’s menu order to understand purchase patterns and cross sell them accordingly. Price: B2C companies focus on value addition to differentiate their product offers apart from pricing, for which they charge a cost. Example, Starbucks differentiate their product on experience of customers for which they charge premium price. Place: marketing strategies vary depending on location and visibility of stores. Example, Starbucks choose to place them in upscale markets and active areas which draws crowd. Promotion: B2C companies depend on their sales staff to pitch sales. Example, at Starbucks front sales team suggest pitches by informing customers about latest addition or special offers.

LO 4.3 Difference between international marketing and domestic marketing

The aim of marketing, whether in domestic market or international marketing is to promote product. It only differs in the boundaries but fundamental principles are the same (Czinkota & Ronkainen, 2012).Domestic marketing is well versed with the culture and taste of people locally. In international marketing target buyer is overseas so company needs to undergo research and analysis of target market in relation to product it wants to sell.

The differences lie in the fact that domestic marketing is limited and may saturate after a given point of time. International marketing has a lot of scope and offers opportunities in the form of newer markets that can be explored (Czinkota & Ronkainen, 2012). For Starbucks, International marketing is more profitable compared to domestic as they have reached saturation in domestic market and currency received is foreign. International marketing uses latest technology to communicate or spread business while in domestic marketing it is of limited use. Starbucks International marketing is dependent on the relation between two countries, one headquarter and the other where business is intended. It also depends on the political situation of the other country and requires understanding of complex trade laws. Starbucks domestic marketing is only concerned with domestic political scenario and it offers little barrier while international marketing is complex in the form of various barriers to be faced like culture, language, customs, traditions, currency etc.

Their international marketing strategy is filled with local flavours of the country where they intend to do business (Starbucks: Our Heritage, 2014). Their promotional strategy is also differentiated and localised. The products offered at the outlet do not follow standard pattern and launched according to the country. The employees involved in planning of marketing strategy are multinational and multilingual that understands local culture.

Examples of Starbucks strategies showing difference in international and domestic marketing:

In US, Starbucks use standard disposable coffee cups to serve beverages and drinks to their customers. But this strategy did not worked out in France where cafe culture is more of traditional. So, they had to face trouble of low acceptance from native customers and hence had to change their servicing patterns in France. Also, new experimented flavours of Starbucks like caramel coffee gained slow acceptance as against classic form of coffee.

Another example can be seen from that in Italy where Starbucks had to diverge from just serving cup of coffee. They had to incorporate serving complementary food with coffee in Italy as is the culture there against the domestic strategies of Starbucks in US. Also Starbucks had to switch to lower pricing strategies for their products as against their premium pricing in domestic marketing to keep off and compete with popular local brands.

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Conclusion

The understanding of basic principles of marketing is an essential component of establishing a brand image of a company. Starbucks uses extensive marketing to maintain its existing markets and to enter new markets

Their aim is to increase coffee drinking habit globally to increase opportunities. Consumer surveys, robust supply chain, modern store design, and innovative drinks are used to attract customers. Newer integrative communication techniques like online ordering and home delivery has also helped in expanding the business and made it one of the most successful retail chain in food and beverage industry.

References

Baines, P., Fill, C., & Page, K. (2013). Essentials of Marketing. Oxford: Oxford University Press.
Baines, P., Fill, C., & Page, K. (2013). Essentials of Marketing. Oxford: Oxford University Press.
Barista Magazine. (2014). Barista Magazine. Retrieved 2014, from http://www.baristamagazine.com/
Czinkota, M., & Ronkainen, I. (2012). International Marketing. New York: Cengage Learning.
Ferrell, O. C., & Hartline, M. (2012). Marketing Strategy. New York: Cengage Learning.

Elements of Marketing Process Assignment