Marketing dicision- micro/macroenvironment - Essay Example

The bargaining power of suppliers is high in the industry as switching costs are low. Threat of new entrants is high as capital investment is low. Threat from substitutes is high again for the regular consumers but for the quality conscious customers, threat from substitutes is low. The micro-environment analysis suggests that Starbucks operates in an environment that is conducive to growth and development. The marketing environment has been defined as the sum total of the external and internal influences that affect the firm’s decision making, that directly or indirectly influence the acquisition of inputs and generation of outputs by the organization.

Thus the marketing environment comprises of the micro- and the macro-environment. The macro-environment comprises of the factors external to the organization and over which the organization has no control; nevertheless, these factors have an impact on firm performance. These include the political, legal, cultural, social, technological, and economic factors. The micro-environment on the other hand comprises of the immediate environment that includes its stakeholders such as the suppliers, customers, the intermediaries, the competitors.

Like macro-environment, these too impact the firm performance and decision-making. Environmental scanning is essential to identify the strengths or the environmental forces that are of significance to the organization. Scanning also helps in forecasting the future trends and in developing and implementing plans as response to these trends. Several tools are employed by researchers to scan the micro-environment because if organizations do not adapt to the changing micro-environment they may face extinction.

The micro-environment describes the relationship between firms and the driving forces that control the relationship. An analysis of the micro environment in which Starbucks, the specialty coffee retailer operates, has been conducted here. Starbucks – micro-environment Porter’s Five Forces: Competitive rivalry In the first few years of entering the coffee market, Starbucks did not face much of competition because all other brands at that time were small-scale coffee shops. The specialty coffee market has grown from 9% in 2000 to 16% in 2004 with another 56% of the adults being occasional consumers.

In 2004 there were 18600 specialty coffee outlets in the United States. The coffee industry is monopolistic and despite several producers and consumers, the services are heterogeneous. The company follows the product differentiation strategy. Demand for coffee is price-related. Coffee shops are can be found all over the place offering coffee at a much lower price. While some take their buying decision based on prices, others look for the brand name. Starbucks did not compromise on prices but instead offered quality product and service.

Starbucks differentiated itself and positioned itself as the most reputed brand in the world. They segmented their target customers as the niche customers who were not price conscious but wanted value for money. Accordingly they positioned themselves as an upscale brand. Starbucks biggest competitors are McDonald's and Donuts. However, Starbucks has been able to combat competition by using multi-channel strategy as it uses the website, their own stores and the grocery stores for distribution.

This gives it competitive edge over small coffee chains. Exit