Introduction
In the modern world, there are numerous companies that offer various products and services to different segments of clients. However, not all businesses are equally prosperous, as only some of them receive recognition around the globe. Analyzation of companies can provide more insight into the reasons behind their successes, and one such example is Starbucks, which has been operating in many countries for years (Gupta et al., 2018). Starbucks’s accomplishments are primarily due to its marketing strategy, which, however, has both positive and negative characteristics.
Overview about the Company
First, before analyzing Starbucks’s marketing, one should assess the company’s background. Starbucks’s establishment was marked with the opening of its first coffee shop in Seattle, USA, in 1971 (Gupta et al., 2018). Although the first shop focused on offering coffee and tea, after Howard Schultz joined the company as director of retail marketing, it also started supplying coffee beans to local food establishments (Gupta et al., 2018). Schultz wanted to promote a cafe culture in the USA, with a relaxed atmosphere for people to socialize (Gupta et al., 2018). Later, he bought the company from its founders and started Starbucks Corporation with a chain of stores in Chicago and Vancouver (Gupta et al., 2018). In several years after its establishment, Starbucks has entered the global market. Promoted as an escape space from home and office, by 1992, the company was the best seller amongst the coffee brands in North America (Gupta et al., 2018). In 1996 its outlets were opened in Japan, New Zealand, England, and several other countries (Gupta et al., 2018). Schultz’s beliefs and endeavors have set the basis for Starbucks’ growth.
Background about the Marketing Issue
With a wide range of products and services offered by Starbucks, there is a need to assess the popularity of one of them. The unique quality of the company’s products is due to purchasing coffee beans from select suppliers rather than wholesalers (Gupta et al., 2018). Although it offers many classic coffee drinks, Starbucks is known to constantly add new ones to the menu (Gupta et al., 2018). Some of those drinks are seasonal, such as Toffee Nut Latte, which is one of the gourmet products (Gupta et al., 2018; “Starbucks holiday beverages,” 2018). Toffee Nut Latte is promoted as providing “heartwarming flavors” for “a cool and cozy treat (“Starbucks holiday beverages,” 2018, para. 4). However, although effective, the marketing of such products has some negative effects.
The notability of drinks like Toffee Nut Latte creates certain issues for the employees and their relationships with the clients. The company’s management recognizes customer experience and operational excellence as essential for growth and therefore emphasizes employee training in managing customer relationships (Gupta et al., 2018). However, since such offerings as Toffee Nut Latte are associated with holidays, they are popular during that period but are also time-consuming in the making (Gupta et al., 2018). With work overload due to occasional staffing issues and high demand for seasonal drinks, employees tend to endure exhaustion and stress, affecting customers’ in-store experience (Gupta et al., 2018). The popularity of Starbucks’s certain products impacts customer experience but not always in a positive way.
Marketing Strategy
Despite the existence of some issues, Starbucks’s marketing strategy is effective in relation to the company’s growth. Under the influence of Howard Schultz, Starbucks’s strategy has focused on maximizing clients’ experience in the coffee shops (Gupta et al., 2018). In the beginning, the company did not even advertise much but rather relied on superior customer service as a part of its marketing (Gupta et al., 2018). However, Starbucks has been implementing ways of improving its products or at least promoting them as improved. For example, the mentioned above Toffee Nut Latte is now advertised with a “Crunch” in its name due to having “crunchy toasted nuts” in addition to its original flavor (“Christmas is here,” 2021, para. 4). Moreover, with the development of technologies, Starbucks has centered its tactic on digital marketing. The company actively uses social media platforms such as Twitter, Facebook, Instagram, YouTube, Tumblr, and Pinterest to enhance its relationships with clients (Taecharungroj, 2017). For several years, Starbucks’s overall marketing strategy has been oriented towards ensuring an excellent customer experience.
Furthermore, Starbucks’s branding reflects its relationships with clients and the use of the Internet. The company strives to be the best coffee brand and retailer, both nationally and internationally (Kee et al., 2021). Research shows that brand power is one of the main aspects behind Starbucks’s success (Kee et al., 2021). Moreover, the company’s branding has been positively affected due to the use of digital and mobile marketing (Kee et al., 2021). For example, on Twitter, Starbucks communicates valuable information such as benefits for the followers, official announcements, and the introduction and promotion of products, stores, and campaigns (Taecharungroj, 2017). Such content is important since, when clients positively engage with a brand on social media, they are more likely to make in-store purchases (Taecharungroj, 2017). Starbucks’s branding as the best coffee provider is partially affected by the customers’ perceptions of it on the Internet.
Starbucks’s marketing strategy can also be characterized by its pricing. Research shows that the company’s prices on products such as cakes are close to the market prices but are slightly higher on drinks, including coffee (Wang, 2021). However, certain beverages, like the mentioned above seasonal Toffee Nut Latte, are marketed as worthy of their price as limited offerings that are sold only during a particular period, such as a holiday (Wang, 2021). Moreover, the pricing of the products in certain regions is different for regular customers who hold membership cards. Those cards are now presented as electronic ones in Starbucks APP and provide various benefits and discounts, encouraging clients to consume (Wang, 2021). Starbucks’s marketing in terms of pricing is meant to justify the prices for the company’s products and make people buy more.
Promotion also plays a significant role in Starbucks’s marketing strategy. Promotion is meant to inform people about new products and provide information about existing ones which Starbucks does by using social media, as mentioned before (Taecharungroj, 2017). On the Internet, the company uses a sales promotion campaign to induce action from customers by sharing information such as discounts within a specified period and giveaways (Taecharungroj, 2017). Furthermore, Starbucks has been focusing on promoting green marketing and environmental protection to reduce its impact on the environment (Tsai et al., 2020). The company claims to put more effort into environmental protection than other coffee providers (Tsai et al., 2020). In particular, it promotes its “green efforts” through interior design and information pamphlets in its coffee shops to gain consumers’ trust and increase loyalty (Tsai et al., 2020, p. 2). Overall, Starbucks uses social media for promotion and adjusts its outlets’ appearance to be promoted and perceived as a company that protects the environment.
When assessing a worldwide corporation such as Starbucks, one should consider its international marketing strategy. As mentioned before, Starbucks was originally founded in the US and has been opening overseas outlets since 1996 (Gupta et al., 2018). At first, Howard Schultz decided to bring the company to countries that were characterized as “non-coffee enthusiasts” and, after succeeding there, focused on mature coffee-loving markets (Gupta et al., 2018, p. 4). To non-coffee drinkers, the company simply offered the “Starbucks experience” along with traditional beverages of each area, such as tea in Japan and China (Gupta et al., 2018, p. 6). These days, Starbucks’s marketing strategy is oriented towards offering specific drinks in certain countries, aside from classic ones. For instance, the mentioned above Toffee Nut Latte is promoted more in the Americas, Europe, and the Asia Pacific (“Starbucks holiday beverages,” 2018). Moreover, while people in Latin America are encouraged to purchase Dark Cherry Mocha, those in Japan are typically offered drinks such as seasonal Christmas Strawberry Cake Milk (“Starbucks holiday beverages,” 2018). Starbucks’s international marketing strategy focuses on monitoring different areas and promoting products that are more appealing to the local population.
Last but not least aspect of Starbucks’s marketing strategy is its positioning. Among other similar businesses in the US, the company mainly competes with Dunkin’ Donuts, but Starbucks’s financial resources seem to be more capable of funding marketing ventures (Lombardi et al., 2021). The company has positioned itself as an “affordable luxury for most people” (Wang, 2021, p. 2). With that being said, Starbuck’s segmentation is oriented on consumer groups who have higher income and value the taste of the offered products (Wang, 2021). Moreover, as mentioned before, from its early years, the company has been positioning itself as the next place after home and office where people can enjoy a “fashionable and warm” atmosphere (Wang, 2021, p. 2). Starbucks’s marketing strategy positions it as a provider of high-quality products in a comfortable setting.
Analysis of the Marketing Strategy
One should analyze Starbucks’s marketing strategy to assess its efficiency, and a way of doing so is by focusing on the company’s achievements. Research shows that the corporation has been growing the number of its outlets in the past ten years, both worldwide and in the US (“Number of Starbucks”). Only last year, there were more than 32000 coffee shops globally and more than 15000 in the United States, with the growth in the US shown in Figure 1 (“Number of Starbucks”). The increase in coffee stores can be explained by the company’s extensive spending on marketing, with the majority of expenses oriented towards advertising (Lombardi et al., 2021). The statistics show the effectiveness of Starbucks’s marketing strategy as the increased number of outlets can demonstrate the company’s popularity among consumers.
Furthermore, with regard to modern days, there is a need to analyze Starbucks’s marketing in response to COVID-19. Research suggests that Starbucks is an example of “aggressive and prioritized” brand loyalty development, which, however, may be at risk because of the virus (Lombardi et al., 2021). As the company was one of the first to restrict dine-in service, its long-term positioning as a warm, welcoming coffee house was endangered (Lombardi et al., 2021). Despite the growing number of coffee shops, Starbucks’s worldwide revenue decreased in 2020, showing the consequences of the pandemic (“Number of Starbucks”). However, the company has developed new ways of marketing its products by bringing them closer to the customers. For example, Starbucks started producing one of its seasonal drinks, Coffee Nut Latte, in the form of couples, promoting it as the opportunity to enjoy high-quality coffee in the comfort of one’s home (“Starbucks holiday blend,” 2020). Although Starbucks has encountered some difficulties due to the spread of COVID-19, the company keeps offering new ways of consuming coffee and marketing those ways as providing unique experiences.
Lessons Learnt
The analysis of Starbucks as an example of a worldwide business provides certain lessons. First, it suggests the effectiveness of choosing the branding and positioning and developing business operations around them rather than continuously changing. For instance, although Starbucks was marketed as another space besides home and work, it still focused on customers’ unique experiences that were kept since the company brought its products to people’s houses (Lombardi et al., 2021). Second, the corporation’s review shows that it may be helpful to enter a market with a new product for it, rather than bringing more products that are already popular among people. In particular, when Starbucks started opening outlets overseas, it focused on non-coffee drinking countries to grow the company’s popularity with this new for certain areas product, instead of competing with similar businesses (Gupta et al., 2018). Third, the analysis demonstrates the importance of researching one’s customers. In addition to the previous example, Starbucks had studied the preferences of people in other countries and offered familiar to them drinks along with new beverages like coffee (Gupta et al., 2018). The mentioned lessons can be important for businesses to consider.
Recommendations
Despite Starbucks’s achievements and an effective marketing strategy, there are some recommendations. As mentioned before, the corporation’s main products, beverages, are higher in price than those offered by other brands (Wang, 2021). Although Starbucks justifies the pricing to promote limited seasonal drinks, like Toffee Nut Latte, and make them more desirable, competitors may use such a strategy against the company. For instance, other businesses may imitate the “Starbucks experience” by offering cheaper products (Lombardi et al., 2021, p. 181). On the other hand, while Starbucks has positioned itself as “affordable luxury,” the marketers of Caribou Coffee Company imply that Starbucks is “pretentious and inauthentic” (Wang, 2021, p. 2; Lombardi et al., 2021, p. 181). Moreover, research shows that consumers may tend to spend less money due to the effects of the pandemic (Lombardi et al., 2021). Therefore, it may be helpful for Starbucks to reconsider its pricing to support its positioning of an affordable brand.
Conclusion
To summarize, while Starbucks’s marketing strategy has majorly contributed to its success in becoming a worldwide corporation, its position may be at risk given the current times. Among other aspects, the company’s marketing strategy focuses on the promotion of its special offers like the seasonal drink Toffee Nut Latte. However, such advertising is characterized by higher prices for beverages and employee overload, which may affect customer experience. Despite that, Starbucks’s branding, positioning, and promotion allow the company to continuously grow and remain among the global leaders of the coffee industry.
References
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