Executive Summary
Starbucks Corporation, one of America’s most prominent brands, is a globally renowned premier roaster, marketer, and retailer of specialty coffee headquartered in Seattle, Washington. Founded in 1971, the company has registered immense growth over the years to become the world’s largest coffeehouse brand, with a global footprint of over 30,000 stores spread across more than 70 countries. Starbucks’ product mix encompasses handcrafted and roasted high-quality beverages and fresh food items throughout the numerous, strategically located company-owned and franchised establishments. The company’s recognition has grown astronomically due to its robust marketing and commitment to sustain its consistency.
Starbucks intends to create an individual experience for their customers in their shops, creating great coffee products, and positively impacting the neighborhoods in which they operate. From this perspective, the company offers the prime benefit of customized and tailor-made beverages, including pre-packaged food items, hot and cold sandwiches, and pastries. Additionally, tea products, instant drinks, and fresh juice are also offered in their outlets.
Starbucks has an estimated workforce exceeding 300,000, known as partners, due to the embraced concept of equality and shared vision (“Starbucks Company Profile”). Although the organization does not disclose its customer traffic by the time of the day, the morning and evening hours are the busiest. Notably, Starbucks has an elaborate and continually growing year-on-year budgeting allocation for its marketing activities, which it conducts through a wide array of channels, such as strategic television adverts, seasonal offers, and menus.
Strategic Objectives
Although Starbucks’ primary objective is profit maximization, the organization has proactively developed innovative strategies to enhance and consolidate its marketing efforts. For instance, the strategy seeks to cultivate lasting customer relationships by maintaining the consistency in the brand’s superior products and customer experience. This implies that the fundamental plan entails the positioning of the organization as the provider of creative and superiorly unique service (Khan et al. 44).
From this perspective, Starbucks plans to strengthen its connection with its customers by developing innovative and tailor-made products for different clusters of clients and strategically positioning the business. Boaventura et al. argue that the provision of artisanal consumables in a characteristically distinctive adventure help to create exceptional value in the service industry (254). More specifically, the organization will distinguish itself by enhancing the quality of its coffee, progressively improving and implementing its service philosophy, and adopting store designs which localize the clients’ experience while preserving the global brand.
As the premier provider of the finest specialty coffee globally, Starbuck’s core mission is to keep the business running by inspiring and nurturing meaningful relationships with customers, partners, and neighborhoods. This establishes the organization’s operational model by emphasizing the indispensability of the company’s culture of unique customer experiences and stakeholders’ rapport to the business’s success. For instance, the design and layout of the outlets accentuate warmth, relaxation, and comfort. In this regard, Starbucks intends to amplify its position as the global leader in the specialty coffee industry and the provider of uniquely distinctive customer experience. To accomplish this, the company aims at cementing its value proposition by intensifying the various features which distinguish it from competitors.
SWOT Analysis
Starbucks’ in-depth analysis reveals an array of strengths, weaknesses, opportunities. The former is the organization’s innovative, positive, and favorable attributes, which can be exploited and harnessed further to improve performance. These include robust global brand recognition and market position, premium quality products, stores’ strategic location, and aesthetic appeals, and consumers’ goodwill due to community-friendly policies (Sholiha et al. 191). The weaknesses are the specific features which erode the firm’s competitiveness, effectiveness, and efficiency. These include self-cannibalizing through outlets’ overcrowding, comparatively expensive products, adverse large corporation impression, and overreliance on the U.S. market. For Instance, Dio Coffee and McCoffee have been aggressively acquiring large market shares in recent years (Sholiha et al. 192).
Starbucks’ opportunities are the potential in the emerging markets, expanding the product mix and offerings, integrating technology in its operations, adopting new distribution channels, brand diversification, and venturing into retail operations. Threats include coffee price volatility in the global markets, increasing competition, changing consumer lifestyles choices and tastes, and outlets’ saturation.
Starbucks’ prominently impressive operations are its effective leverage on the rich brand equity, mainly through franchising its logo and merchandising products. Additionally, they avoid standardizing the quality of their output and entrenching organizational citizenship behavior by providing enhanced benefits, healthy work environment, and retirement accounts to employees (Tikson and Hamid 4).
However, the company should improve on reducing the opening of new outlets, increase the visibility of its community activities, and exercise greater control of the franchises. The three things working to the firm’s advantage are robust customer loyalty, superior supplier relationships and distribution channels, and a globally recognized brand. Rising labor costs in the coffee-producing countries, the adoption of healthier lifestyle choices by consumers, and the emergence of cheaper offers from competitors are the major external factors adversely impacting Starbucks’ operations.
Segmentation, Targeting, and Positioning Analysis
Starbucks’ segmentation, targeting, and positioning encompass marketing decisions designed to identify the sections of population as future clients and developing strategic approaches through product positioning and service which resonate with their needs and wants. Khan et al. contend that Starbuck’s market subdivision is anchored on the consumers’ distinct attributes, including geographic, demographic, and psychographic (45).
The prominently potential customers are aged between 25 and 40 years, who tend to hold professional careers and high-income levels. This category of customers is searching for impressive spots for socializing and relaxing while consuming their favorite beverages. Reaching this client segment will entail revamping the stores’ general design and layout and creating an ambient environment for family and friends’ gatherings. The overall message is that Starbucks has developed highly individualized and tailor-made products and services that suit their lifestyle for any day or occasion. This will be the target segment to which the new coffee-flavored smoothies will be marketed.
Additionally, Starbucks targets young adults aged between 18 and 24 years. The company positions itself as the premier place where college-going students can spend time, relax, study, and socialize. Notably, Starbucks appeals to this category of customers by investing and adopting technology, innovative ideas, and elegant outlet designs. This segment of clients is earnestly seeking aesthetically impressing and stylish spots, infused with internet connectivity and artistic appeal. The central message to this group is that the business has reasonably priced products and services offered in an environment which befits their lifestyle.
The last group is teens and kids between the age of 12 and 17 years. Although this segment is not as expansive as the previous two, Starbucks significantly focuses on them since they accompany their parents during family outings, dinners, and dates. However, the company does not directly target children and teenagers but develops creative kid-friendly products to be purchased by parents. For instance, sugary, caffeinated, whipped creamy coffee and steamed milk are popular with teens and kids. This group of customers wants lively, energizing, and attractively packaged provisions with impressive age-appropriate visual-pictorial cues.
Pursuing this cluster of customers will entail developing child-friendly indoor and outdoor layout plans where they can enjoy their playful behaviors while their parents relax and watch. The primary message for teens and kids is that Starbucks has developed age-appropriate and healthy products which their parents can purchase and consume in an ambient environment.
Marketing Mix
Starbucks has an elaborately comprehensive marketing mix, which reinforces its industry position as the world’s premier coffee outlet. The company utilizes price, promotion, product, place, presentation, and personnel to enhance its competitive advantage, penetrate new markets, and grow its customer base. Starbucks’ product and service component focus on developing an innovative combination designed to capture the beverage market.
Considering the growing adoption of healthy eating habits, especially among people aged between 25 and 40, the company considers creating a blend of coffee-flavored smoothies as a meal replacement for this customer category. McCartney et al. recognize the changing consumer behaviors, attitudes, and beliefs, especially regarding smooth consumption (426). Moreover, the products will tailor-made and freshly prepared according to customer’s distinct tastes and requirements. This pattern highlights the enormous potential in the smoothie beverage business.
The place component determines the approaches at which the target segment will access the coffee-flavored smoothies. This product will be availed at cafes and coffeehouses strategically located in urban areas where the selected consumers are likely to be found. The outlets will be seeking to amplify the in-store experience, with a particular emphasis on a relaxing environment which supports socialization and interactions. This strategy will capitalize on the target customer’s pursuit for enriching experiences which make them feel recognized and respected (Slootweg and Rowson 87). For instance, the setting will feature both indoor lounges with unimposing space and outdoor areas with internet connectivity.
The promotion aspect will seek to disseminate information regarding the newly developed coffee-flavored smoothies and encourage the targeted market segment to buy the product. The company will harness social media and advertise on various popular web-based platforms, such as YouTube and TikTok. Additionally, Starbucks will advertise through on-site free samples as an introductory offer to customers, strategically located billboards, and eye-catching displays in magazines and spaces.
Starbucks will use a premium pricing strategy for the coffee-flavored smoothies to exploit the target segment’s behavioral tendencies to purchase expensive products based on their perceived correlation between value and price. In this regard, this new and innovative product will be priced relatively higher than the competing products or substitutes. Notably, this pricing strategy cements Starbucks ‘ position in the industry as the premier supplier of the premium commodities by making its offerings exclusive (Alshakhsheer et al. 18). Therefore, this pricing model will reinforce the perception of the target market regarding their image and self-worth.
The presentation of the coffee-flavored smoothies will be done through elegantly designed and branded packaging. The packs will be the perfect fit for multiple occasions, places, or events. In this regard, they will be fashioned for picnics, professional meetings, socialization events, or just for outdoor relaxation. Indeed, the primary objective of the elegant design and packaging is to secure an appealing first impression and accentuate the specific focus on the taste, luxury, and style of the target client. For instance, a hand-held, capped, and pout-equipped container suits outdoor occasions and can be easily carried as the customers walk without spilling. Additionally, the personnel will play an integral role in asserting and amplifying the product’s attractiveness and appealing to the target clients.
There are various resources which will be required to implement the marketing plan. For instance, an adequate budgetary allocation is critical in executing the free samples stations across various strategic spots at least three days a week. Additionally, Starbucks will develop highly appealing billboards, visible spots in magazines and newspapers, and advertising segments in social media and other electronic platforms.
Moreover, skills such as content creation, schedules, social media management, graphic design, and technical skills will be fundamental resources in successfully implementing the marketing plan and the subsequent anchoring of the brand’s image. According to Taecharungroj, effective social media marketing should integrate a wide array of strategies, including the development and sharing of informative, emotion-evoking, and action-inducing content (552). This implies that the comprehensive plan will significantly emphasize the visuals, attractiveness, and content which strongly resonates with the targeted segment.
Personnel
Starbucks’ organizational culture recognizes employees as the most valuable business asset, with a direct influence on customer satisfaction and the entity’s performance. A committed and motivated workforce is the platform on which the company’s success is built (Xue 2979).
Similarly, this marketing plan will utilize the personnel’s warm and friendly ambiance to create a relationship-driven appeal. In this regard, the employees are expected to positively influence sales through communication and openness. They will highlight the benefits, variants, and any other relevant aspect of the coffee-flavored smoothies by initiating conversations with customers. The personnel will be trained in conversations to enhance their relationship-building abilities, sales presentations to effectively pitch the product, addressing objections, field selling, consultative, and reference merchandizing. These techniques are critical as the company prepares to launch the product entirely.
New products fail for various reasons, including the absence of realistic and measurable key performance indicators. Badawy et al. contend that these metrics are critical in gathering knowledge and exploring the most effective approaches to achieve the desired objectives (47). Starbucks will use the conversion rates and the frequency and breadth of product use. This ratio is a highly effective measure which accurately indicates the effectiveness of the sales team (Singh et al. 1053).
In this regard, the organization will know that the business has achieved its marketing objectives from the continued growth of new users of the coffee-flavored smoothies and when the number of store visits by customers reaches 70 on any given day. Additionally, the combined frequency of news buyers and repeat customers will be critical in indicating the marketing plan’s success. Thus, the conversion ratio, breadth, and frequency of use will be the specific metrics to be used.
Conclusively, Starbucks Corporation is a multinational coffeehouse which strives to provide a high-quality, innovative, and unique experience for its customers. The organization seeks to develop various coffee-flavored smoothies to capitalize on the increasingly growing demand for the product. Notably, the company’s global footprint and strong brand presence in the market are critical in promoting the new product. However, the firm also faces aggressive competition from competitors selling their substitutes at relatively lower prices.
Notably, people aged between 25 and 40 are the most potential customers. Starbucks will utilize place, promotion, pricing, and the product’s specific attributes to promote its entry into the market. The organization will use the conversion ratio, breadth, and frequency of use of the coffee-flavored smoothies as the key metrics to determine the sales team’s effectiveness and success.
Works Cited
Alshakhsheer, Firas, et al. “Financial Implications of Competitive Pricing Strategies: Evidence from the Jordanian Hotel Industry.” Business Management Dynamics, vol. 7, no. 5, 2017, pp. 16–26. Web.
Badawy, Mohammed, et al. “A Survey on Exploring Key Performance Indicators.” Future Computing and Informatics Journal, vol. 1, no. 1–2, 2016, pp. 47–52. Web.
Boaventura, Patricia Silva Monteiro et al. “Value Co-creation in the Specialty Coffee Value Chain: The Third-Wave Coffee Movement.” Revista De Administração De Empresas, vol. 58, no. 3, 2018, pp. 254–266. Web.
Khan, Sabrena Khanum, et al. “Starbucks Market Segmentation and Targeting.” International Journal of Business and Management Invention, vol. 7, no. 5, 2018, pp. 44–45. Web.
McCartney, Danielle, et al. “Smoothies: Exploring the Attitudes, Beliefs, and Behaviors of Consumers and Non-Consumers.” Current Research in Nutrition and Food Science Journal, vol. 6, no. 2, 2018, pp. 425–436. Web.
Sholiha, Ali, et al. “The strategy of Starbucks and its Effectiveness on its Operations in China, a SWOT Analysis.” Asian Journal of Business and Management, vol. 4, no. 5, 2016, pp. 189–194. Web.
Singh, Drjagdeep, et al. “The Role of KPIs and Metrics in Digital Marketing.” Research Review International Journal of Multidisciplinary, vol. 4, no. 1, 2019, 1053–1058. Web.
Slootweg, Emilie and Rowson, Bill. “My Generation: A review of Marketing Strategies on Different Age Groups.” Research in Hospitality Management, vol. 8, no. 2, 2018, pp. 85–92. Web.
“Starbucks Company Profile.” Starbucks Company Profile, 2021. Web.
Taecharungroj, Viriya. “Starbucks’ Marketing Communications Strategy on Twitter.” Journal of Marketing Communications, vol. 23, no. 6, 2016, 552–571. Web.
Xue, Collin Ting Si. “An Examination on Human Resource Management in Aligning to the Organizational Strategy.” International Journal of Management & Information Technology, vol. 11, no. 5, 2016, pp. 2979–2985. Web.