Starbucks aimed to establish a third place which according to Schultz (Starbucks’s C.E.O) is “a place away from home and work.” He developed a great customer service and an inviting aura for coffee lovers an experience that popularly goes by name “The Starbucks Experience.” The segmentation and targeting strategies employed by Starbucks encompassed the following: Geographically Starbucks chain stores were operating in America and because of the phenomenal growth the stores hit around 17000 occupying both the urban, semi-urban, and rural areas.
Demographically, Starbucks typical customer was a female aged between 24 and 44 years. In addition, the clients preferably were better educated professionals. The coffee treats were sold at premium and was for clients who led luxurious lifestyle and came from the high and middle classes. Customer service was very excellent; the barista exchanging pleasantries while filling the customer’s order underscores this fact. The lounges were furnished with classic furniture and always filled with a ‘perfect mix” of music gave rise to a loyal customer who visited regularly and as often as daily.
Starbucks pursued a rapid growth strategy and within a very short period it had very many store within any locality. This growth achievement came with many challenges; initially Starbucks pursued a concentrated market targeting where the traditional client visited Starbucks stores mainly because of the satisfying Starbucks experience. With now the massive expansive expansion, Starbucks Baristas could no longer give highly customized service and then the target shifted to differentiated marketing; the menu list increased and the traditional bond with the client weakened. The result thereof was discontent among the traditional clients who gradually withdrew their loyalty which led to decline of earnings.
Positioning refers to the perceptions which customers hold regarding a company or a product. Therefore, organizations pursue particular marketing activities to get customers thinking about a product in a certain way. The revelations that the shrink in growth in Starbucks was as a result of diluting the Starbuck’s experience, rests on a value positioning strategy to lure back the traditional client. Value in this case means giving clients customized quality services.
Starbucks management embarked on a journey to win back their customers. The activities employed included; carrying promotions centered on regional cultures of the world, their special coffee, art, and designing of stores to reflect societal unique culture coupled with Improving store service through addition of labor and installing automated machines serve customers much quickly. Moreover, the company employed a coffee master who further trained the baristas to give quality services.
Finally, the company added a new line of ultra-premium coffee made of whole-bean coffee and revamped the music by introducing the Wi-Fi system on top of creating own music. The value positioning is seen when Schultz introduced the campaign to educate consumers that Starbucks coffee was not as expensive as they thought and further unveiled new products; breakfast combos and instant coffee.
Despite Starbucks pursuing the value positioning strategies deeply, the result was a drop in profits by 77 percent. It is therefore evident that value positioning strategy alone will not bear as much fruits. Apart from the adopted marketing plan by Starbuck, there existed other options including cutting of prices, spreading more to the global economies, and attracting customer through loyalty enhancing activities. Instead, Starbucks stuck to the premium coffee and concentrated more on the American market than any other economy.