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Starbucks
Established in Seattle Washington 1971
Known to produce the world’s finest fresh-roasted bean coffee inspired by Italian
tastes
Promotes Coffeehouse experience:
Selling – the company’s own premium roasted coffee
Variety – along with a variety of pastries, coffee accessories
teas and other
Atmosphere – in a tastefully designed coffeehouse setting
French Market:
Strong tradition of the “café noir” (black coffee), avoid French to avoid
coffee with additives such as syrup and honey.
- Japan
Low roofs, traditional and often with allusions to its national religion,
Shintoism. To recreate this feel, Starbucks has partnered with local
designers to identify the spirit of a city. E.g. Fukuoka, in Kyushu, has a
Starbucks with 2000 interlocking wood blocks, to give the impression of a
forest to fit with the spirit of Shintoism: honoring nature.
- Saudi Arabia
- France
Perception of French over Starbucks coffee = Overprice and low quality
- Amsterdam
Starbucks built stores that supported to local culture scenes, for instance
building a stage for poetry in a converted bank vault at Rembrandtplein.
Globalization Enabled entry into new foreign markets, increases sales revenue as
more customers are available.
The increase in cross-border trade and the gradual
development towards a unified, integrated and
Negative: Overseas competition
international market Rival coffee shops started copying Starbucks’ business practices, name,
and even its company logo. Starbucks had to utilize intellectual property
laws to dispel customer confusion between itself and competitor
- Personalized attention
Statistics
75% market share
8.15% growth in customer base
5.79% growth in number of stores
2003 entered European Markets
1999 entered Chinese Market
191 stores in China
99% ethically sources coffee
$100 million invested into local coffee community
Mobile Order & Pay introduced in 2015, accounted for 7% of U.S orders
18% revenue growth 5% transaction growth in china
Employee wages 9.48 per hour
- There are more than 500 interesting and engaging videos of Starbucks brand and products
on YouTube. It has released videos of its products, supply chain and various other aspects of
its business operations.
- Twitter has also become a favorite spot for marketers. It has helped them address a very
large audience without any significant investment. Starbucks has made more than 87,000
Tweets and has more than 11.8 million followers. Informing the larger audience of the existence
of the brand.
Starbucks has a distinct marketing strategy that starts right from its products. Starbucks has used the
formula of quality based product differentiation which has resulted in high level popularity and
customer loyalty.
Product quality must be considered the central pillar of its marketing efforts.
- it helps with brand image and reputation including great customer service.
- Great taste equals higher recognition and popularity. As a brand, Starbucks has built great
reputation over time for the quality of its products, their flavor and for unequalled customer
service.
- A lot of marketing takes place at their stores and through brand merchandise. Great customer
service has also added to the brand’s positive reputation. In the recent years, investment in
marketing and advertising has resulted in better sales and increased brand recognition.
Starbucks has positioned itself as a premium coffee brand based on an overall premium experience
designed to take the coffee experience to the next level. Apart from great quality coffee, the brand’s
value proposition is also based on a great customer experience supported by excellent store
environment meant to drive fatigue away and offer guests premium space to relax.
Segmentation:
Since Starbucks is a premium brand, its customers are mainly from the upper economic strata or the
upper middle class and upper class. The brand targets people who want a peaceful space to drink
coffee and shake fatigue away. These are higher wage earning professionals, business owners or other
higher end customers in the 25-60 age group mainly. People with a fast moving life style want good
quality coffee along with an environment where they can relax. Starbucks offers all these privileges at
a single place.
Brand merchandise are an important part of any brand’s marketing strategy. They also play an
important role in customer retention and satisfaction. Starbucks logo is printed on the brand’s
merchandise. Attractive looking merchandise are always pleasant and add value to a brand’s
products. A perfect cup of coffee cannot be perfect if the cup is imperfect (packaging) Well, this is a
strategy most customer focused brands employ.
Starbucks has also employed unconventional techniques for marketing its brand. Traditionally,
Starbucks has not relied on conventional marketing and advertising methods. It did not advertise its
brand in traditional places like billboards, posters, or advertisements in the common places like
Newspapers or television. However, it was still able to generate very high level of publicity and
popularity.
An Ethical Brand
To better market itself as a responsible brand, Starbucks focused on its long term branding as a quality
focused, customer oriented and ethical brand. Apart from great looking stores where the customers can
sit comfortably and enjoy a great cup of coffee amid excellent service, Starbucks has focused on the
other parts of its business operations to create a unique and strong brand image. Ethical sourcing is
also an important part of its business strategy. Starbucks sources 99% of its coffee ethically from
suppliers around the world. This gives rise to an ethical image which proves favorable in terms of
marketing as well as customer loyalty and retention. The image of an ethical and accountable brand
can be a major plus point in the 21st century. Customers are more loyal to brands that are environment
friendly and accountable.
Starbucks was known for not investing in marketing. All the marketing was based on its brand
image and the fame it had earned by offering premium quality products. In the recent years however,
it made some changes to its marketing strategy and started investing in advertising. This is because,
to be able to adapt with the market changes and used as their extension strategy.
Now, its advertisement are visible on television, print and other digital channels too. In 2015, it invested
more than $351 million in marketing and advertising. Its TV commercials highlight the newest and
most romantic flavors available at the Starbucks stores. However, advertising and paid promotions
are not a central focus at Starbucks. Compare its marketing budget with other celebrity brands like
Coca Cola or Nike spend and it would look like Starbucks spends thriftily on marketing. From 2006 to
up to date, its focus was to spend more on having talented people and good quality raw material
than on advertising gimmicks for enormous growth. For instance, last year 6,535 Starbucks
employees received full college tuition coverage. It’s not just coffee, it’s helping college.
Its 2006 annual report states it clearly – “When we set out to become the world’s leading purveyor of
fine coffee, we didn’t put all of our focus on how large we’d become or just how much profit we intended
to make. Intuition told us that our ultimate success would depend less on clever advertising gimmicks
than it would on the special individuals we’d bring onboard, one by one, as we worked to make our
dream a reality”. That’s how they rolled till 2006 but in later years started spending on marketing and
advertising. However, the budget has never touched even half a billion.
In addition the big company has never used any celebrity to represent their brand. Other well-known
company such as Nike, hires sports celebrities such as Michael Jourdan and Tiger Woods and receive
payments of $40 million.
(millions $) (millions $)
2017 282.6
2018 260.3