Effect of Advertising and Economic Factors on Company’s Sales: Case Study of Starbucks

Sofia Shchetnikova

Bachelor's thesis

Abstract:

The author’s goal lies in understanding if marketing or advertising has a significant impact on the market capitalization and revenues of the company chosen by the author for her research – Starbucks, international corporation based on the USA specializing on the sale of coffee containing beverages and snacks. In addition to the main goal, the author also analyzes weak points in the company’s operations and identified potential risks that might endanger the company’s position on the market. As for the the quantitative research, the author focuses on creating a recursive linear regression model that will help the author to describe the main factors influencing price of stock of Starbucks and Starbuck’s revenues at the same time, as well as the author will quantify this effect. For the qualitative analysis, the author relies on a SWOT analysis that will help to identify and examine internal factors (strengths and weaknesses) and external (opportunities and threats), Porter’s Five Forces or Five Diamond Model and finally, a PESTLE analysis that will identify a series of additional factors influencing Starbucks from different perspectives. All in all, the author is able to conclude the fact that based on the linear regression analysis, it turns out that the effect of advertising expenses on the company’s sales is rather low with just 13 million US dollars increment for each 1 million spent on marketing. Also, the effect of marketing is low on the change in price of share – just 0.07 US dollars per 1 million increments in the marketing expense. In addition to that, the author concludes that the company’s biggest threat is its inability to comply with ever-changing green agenda and constantly emerging new environment- protection laws. Another threat is the fact that the price of inputs will be driven up and the company’s products will become less accessible to particular customer groups.

Keywords

Statbucks, Sales, Competition

Language used: English

Date on which the thesis was submitted / produced: 14. 3. 2023

Thesis defence

• Date of defence: 18. 5. 2023
• Supervisor: Ing. Olga Regnerová, Ph.D.
• Reader: Tomáš Macák, Ph.D.

Czech University of Life Sciences Prague

Faculty of Economics and Management

Bachelor programme:
Business Administration