Implementation Plan:

Product
Starbucks is known for providing superior products and services. Consumers
have enjoyed the experience they encounter at Starbucks, and now for those who seek
a high quality non-coffee drink can enjoy the same experience. By introducing these
new summer drinks, Starbucks will enjoy an entirely new segment to market its
products to. When looking at the sales revenues for the summer drinks it is important
to consider that some of the existing customers will inevitably cross over and begin
consuming the new drinks. In the end, the expansion of the product line is a wise
decision because of the ease of adoption to Starbucks reputation for quality as well as
the low cost of implementation.

Price
The main competitor to the new summer drinks is Jamba Juice with its
smoothies. Comparatively, Starbucks summer drinks are priced significantly lower. In
addition to low comparative price, the perceived benefits for consuming a Starbucks
drink are quite high for most consumers. Therefore, when a customer does a value
analysis and divides perceived benefits by the price, the resulting value for the
customer is quite high. With the price of the summer drinks being lower than it
competitors, its price sensitivity is low. However, over time as consumers adopt the
product they may become aware of other products and therefore the price sensitivity
will increase overtime. The delicate balancing act is to manage the price of the drink
low enough to gain market share while still preserving Starbucks’ prestigious image.

Place (Distribution)
Starbucks distributes its New Frappuccino Blended Beverages directly to
customers through its own retail stores. Currently these new Frappuccino flavors are
only available in North American Stores. With numerous locations, it will be
convenient for customers to buy these new Frappuccino products. These new
Frappuccino flavors are available year round. Due to the demand and appeal of the
products, revenue from this product will fluctuate as the seasons change.

Promotion
The easiest methods for promoting the latest summer drinks are by internal
advertisements within its retail stores, such as posters, new product signage, and other
internal means. However, this type of promotion will have the least amount of effect
on gaining more market share of non-coffee drinkers. Therefore we have done
analysis of other mediums for promotion; the top 3 mediums of advertising, according
to figures from 2000, include Newspaper, Network TV, and Spot TV1. After reviewing
the goal of increasing awareness of the product to attract people to the retail locations
we recommend using a medium that today is in direct competition to the TV, website
marketing. Starbucks has historically avoided advertisements on TV, due to attempts
that had reduced the brand image, furthermore the cost to do TV spots is far greater
then by websites, this is not to say they should not do TV spots, but we recommend
they avoid head-to-head marketing with competitors such as McDonalds, and other
Fast-food chains.
Starbucks has determined that most of its targeted customers consider
themselves relatively technology savvy via the computer. An increasing number of
companies are using the World Wide Web to communicate and after considerable
review, we highly recommend a web campaign aimed to increase awareness of the
Summer Drinks. Websites that are highly reputable or that can be partnered with will
be the most successful in generating awareness. TV Commercials may also be done,
however we do not recommend during the introduction stage. During Growth would
be far more effective.
Risk Assessment of Mitigation techniques
Companies can use different approaches for assigning probability. The classical
approach states that all possible outcomes have the same degree of likeliness to occur,
such as when tossing a coin and getting heads or tails has the same chances. Risk
assessment is a big part of building a safe and solid product to launch. The cost of
failure is always a risk, such as time, materials, and labor, should a project not
succeed as anticipated. For example, if not properly thought out and researched,
Starbucks¡¯ expansion to an unknown country would be costly and possibly
detrimental if the service fails in a new location. Mitigation techniques to consider
would be to benchmark what other companies have done in the industry to
successfully build in other locations. The company is already aware of what their
customer¡¯s culture and expectations are in The United States and other countries
where they are already established. They need to research what changes and new
products their customer base would be receptive to in foreign countries.
Starbucks should begin by dividing project tasks among the different departments that
are involved. They should schedule biweekly meetings to get together and discuss
their progress and deliberate issues at hand. Starbucks needs to choose a new product
concept and begin development on the implementation and characteristics of new
flavors and combinations of coffee/tea types, should they choose this direction. A
major part of the development process is research and benchmarking.

1
 Probability testing allows the company to gain insight into how successful the
venture will be. Organizations use descriptive statistics to describe the behavior or
characteristics of a particular sample of participants in a study. Different levels of
measurement are used to relate values to one another. Nominal values simply are a
place number that identify each individual. Regardless of whether their number has 3
or 4 digits, they are of equal status. Ordinal measurement distinguishes experience or
levels, not meaning that the first level is superior to the second. Interval measurement
shows change in meaning between levels, some levels are more intense or are more
valued than others. For instance, ratio measurement could track time or weight
characteristics, possibly showing what time of the year earnings are typically higher
for the company.
Starbucks needs to use hypothesis testing with a sample of the general public to
show a study of how consumers will accept and react to this new flavors and products.
Starbucks could use an outside research team to perform the necessary research. In
order to make a hypothesis, people have to have the data available to take a sample.
Hypothesis testing is useful when comparing only two population means, but it is not
useful when a comparison is needed for several population means at the same time.
There is always room for error in the hypothesis testing process. Hypothesis testing is
a method that uses experiments to prove that a process or statement is true. This
testing checks the validity of a statement about a population parameter (Lind,
Marchal, & Wathen, 2004). Hypothesis testing allows professionals to make accurate
assumptions about why something is occurring or what is causing a behavior.
Another possible type of test that Starbucks could use for their collection sample is
the ANOVA test. This would only be necessary if they were going to collect more
than two sample types. They could separate the studies into age groups, men, women,
and/or income. The ANOVA or analysis of variance test compares three or more
samples or treatments. The purpose is to avoid error in performing many t tests in one
project. With a t- test, statisticians accept 5% chance of being wrong. When
performing many t-tests for one experiment, one is likely to be wrong. ANOVA
detects differences as a whole, rather than detecting separate results.
Normal distribution can be applied to variables of a random nature if it is a
large sample size. Normal distribution can be applied to functions such as process
variations in operations management, employee performance in human resource
management, and returns of diversified asset portfolio (modern portfolio theory).
Normal distribution can be applied to situations where the data is distributed
differently and a large sample size is drawn, which is covered by the central limit
theorem.
The resulting variables in the normal distribution are called Z values. The mean
is zero and the standard deviation is 1. In the public health field, examples of
variables that follow a normal distribution are age, weight, and blood pressure. These
variables are continuous. For variables that are not distributed normally, ¡°alternative
nonparametric tests should be considered; however, such tests are inconvenient
because they typically are less powerful and flexible in terms of types of conclusions
that can be drawn.¡± http://www.answers.com/topic/normal-distribution?cat=biz-fin
Linear regression tries to find the connection between two random variables, X and Y.
For instance, a test could be done to find the relationship between gender and
preference of flavor from a group of adults. It is explained in a straight line fit to the
data.
http://www.math.csusb.edu/faculty/stanton/m262/regress/regress.html Multiple
regression analysis shows the relationship between more than two independent
variables and a dependent variable. An example would be to collect data to show the
relationship between the cost of coffee and characteristics such as household income,
gender, and age. A predictor about pricing might be by how much a person¡¯s income
is, rather than by the age of a person. http://www.statsoft.com/textbook/stmulreg.html
The assumptions underlying linear regression are: linear relationship between
dependent and independent variables, dependent variable is interval or ratio variable,
non-correlated successive observations of dependent variable, differences are
normally distributed between actual and estimated values, all values have same
distribution for (Y-Y to the first) (Lind, Marchal, & Wathen,2004).
Unplanned conditions like flooding, drought, and fire are risk factors for
improving brand recognition of the company¡¯s coffee lines because they could
prohibit the flow of quality bean growth. Starbucks also runs the risk of having
decreased product quality due to the use of substandard coffee suppliers to meet high
coffee demands.
¡°Major concerns could include anything from a drop in quality to the brand losing its
luster¡± (Linn, 2007).
Once the company performs the necessary testing and collected data, the
departments should come together to discuss the results. The results could sway the
players in a direction because testing enables them to see a clear picture of what the
outcome might be of a particular venture. From there, a decision needs to be made on
what direction to move in, starting the detailed development and strategic
implementation processes. Focus teams should be set and tasks should be delegated
to proceed, along with a timeline in place.
Optimal Solution
- Because Starbucks seems to have expanded to every street corner in the United
States the increased expansion in international markets and decrease expansion in
domestic markets seems to be the logical solution to increasing brand image without
decreasing consumer interesting in Starbucks product lines. The use of time series
analysis will help the executives identify trends and patterns that will guide the
appropriate rate of expansion the company should use at any given time.
Implementation Plan
Start implementation plan here.
Evaluation of Results
Starbucks is recognized as one of the fastest growing companies in the United States
which is part of the strategy set out by its CEO Howard Schulz when he purchased
and took over the company in 1987. ¡°Starbucks Coffee Company has been
recognized as one of the ¡°Ten Most Admired Companies,¡± one of the ¡°100 Best
Companies to Work For,¡± as one of the ¡°Fastest Growing Companies in the U.S.,
and ranked as a FORTUNE 500 company by FORTUNE magazine¡± (Ozburn-
Hessey, 2004).
The store growth of Starbucks took off in 1987, when Howard Schulz took over the
stores and the brand name. The number of stores shows steady growth which is shown
in table 1. The scatter diagram, as shown in fig. 1, resulted from plotting the data
from table 1.