S Marketing Assignment

8/3/2019 S Marketing Assignment

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STARBUCKS

1104046S

12/12/2011



Introduction

The main focus of this essay is the brand Starbucks, its product Coffee & where does it stand as a

brand with respect to its competitor. Starbucks was founded in 1971 in Seattle (USA) which is alsothe corporate head quarter of the company. Starbucks became a publicity traded company in 1992

and opened an average of two to three stores per day and to date the company has more than

17000 stores including self-operated and licenced store. Starbucks is currently positioned as an

exceptionally tough brand which offers a variety of coffee along with different types of flavours to its

potential customers with never forgetful experience in their ever attracting ambience. The company

has established its brand by means of pioneering strategies at different level of business and is often

considered to have a cult following rather than the traditional customer to product relationship. As

rated by Inter brand, Starbucks was valued at US$ 3.7 Billion in the year 2011. The given below is the

time graph of the company for the period ranging from 1996-2010.

Elements That Shape the Personality of Brand

Aaker (1997) explains that “brand personality is the human characteristics t hat can be applied to a

company brand” . Consumer representations of brands on a five-factor Brand Personality Scale (BPS)can be measured by means of using personality, as seen in diagram below



Honesty – Humble

Starbucks worldwide presence and requirement for a standardized service & product had made itreally difficult for Starbucks to link by means of its brand, a mild feeling and warmth in all its outlets,

which it has overcome and created.

Enthusiasm- Fashionable

The logo of Starbucks conveys the trendy message.

Capability- Assertive

Starbucks is known for its quality and brand of coffee and not for selling bad quality coffee, which

has been accepted by its huge coffee consumers.

Complexity- Charming

Quiet often Starbucks sends out messages in a charming feeling, wherein it in many occasions has

mocked its own clients in their advertisements (youtube.com), in order to show that they have the

‘charming’ smooth inspirational value, which has helped Starbucks

Ruggedness- Western

With-in the United States of America Starbucks follows the Western inventiveness by an Italian

ambience and designed coffee in order to maintain better services and quality

The widely acknowledge factor in creating a crucial connection between its brand and customer is

called Brand Personality. Six different important factors suggested by Didier Louis and Cindy Lombart

(2010) that shape the brand personality w.r.t customer view point are:-

-Alleged Product Superiority – High priced excellent quality coffee

-Aims of upcoming performance – The Company build a sense of honesty and faithfulness in its

consumers by means of its corporate social responsibility activities.

-Faith in Product – by maintaining a standard and steady and reliable taste, it makes its customersreturn back for the same feeling there by building a faith in its brand.



-Affection towards product – Once the faith in the brand is set in, a bond is developed between the

customers and the product. Hence by word of mouth every client becomes an ambassador and free

promoter.

-Brand Commitment – regular and faithful starbuck customers are often rewarded with outlandish

and special products.

-Lastly, the charm towards the Starbucks product can be sustained and improved by following all the

above said parameters.

Added preciseness towards the service orientated companies and Starbucks’ human centric

philosophy Speimann & Babin (2011) suggest, “Just as personality captures the aura of a person,services personality captures the aura of the particular service providing unit”.

Segmentation

Starbuck’s doesn’t limit them to one specific behavioural, geographical or demographic segment and

thus hold multiplicity. This is one common place for every individual. Most adults are very open-

minded however they have their own strong beliefs in regards to different sensitive issues e.g. age,

politics, race, money, religion still every individual appreciate the fact that despite being a little

difference also they are treated equally at Starbucks. The company encourages women and

minorities who own their own businesses. The company works to inspires diversity and thus makesits customers feel that they are valued (starbucks.com). The non-coffee drinker, socially conscious



coffee drink and regular coffee drinker are different segments however have same needs, respond

to market stimulus, and can be achieved by means of marketing(Jobber & Fahy 2006). The

segmentation used by the company permit itself to position as a high value, high price and social

conscious brand.

Target Market Selection

In the beginning Starbucks mainly targeted the people from social class, college students and

neighbourhoods who would be quite open to the idea of spending $3 for a cup of coffee and

spending leisure time with their family or friends at stores. However with the fast expansion,

progress and growth Starbucks also targeted rural community, small towns, markets with existing

various coffee shop and even highway rest stops. They initially targeted niche market however in the

long run included potential customers from all phase of life. One of the primary reasons for

Starbuck’s success is the strategy of presenting it stores as amid of office and work to meet up or to

socialise.



Buyers Behaviour issue

Functional, emotional benefits or both play a very important role in the decision making factor for a

customer in choosing his brand (Jobber and Fahy, 2006). Along with functional and performance

benefit a consumer also sees symbolic purposes or social status or to fulfill their internal

psychological needs, such as the need for change or newness (emotional purposes) (Solomon et al.,

2002) while choosing certain brands.

Starbucks is involving its customers directly in to its many products. Initially Starbucks products that

are marketed in the status segment, involves itself at a higher place than the unbranded cheap

coffee in the market like Subway, McDonalds etc. In store bold campaigns like the ‘Bold Coffee’ &

‘Via’ taste tempt the customers to come to store and taste its products. (Jobber and Fahy, 2006)

Many customers tend to change their taste or band after tasting and liking new stuff. Introducing

new flavors every now and then and making its customers to try them and adapting them for new

changes, Starbucks is actively managing in consumer’s inclination to try new things.

Competitor’s Analysis

A competitor analysis helps a firm to understand the position of its competitors and opportunities

that are available to gain a competitive advantage. Starbucks coffee beverage competitors include

Caribou Coffee, Dunkin Donuts, 7-Eleven, Biggby Coffee, Panera Bread, Mc Donald, & Einstein

Bagels.

Direct Competitors

Companies like Dunkin Donuts & McDonald are the direct competitor to Starbucks not only because

they have wide range of Coffee’s to serve its customer however also the fiscal possession & location

to influence their strong points to impend the cost-effectiveness of Starbucks.

Indirect Competitors

Caribou Coffee is the indirect competitors to Starbucks and the reason being is the environment in

between the two is quite similar i.e. stress-free atmosphere, furniture and fixture, free access to

internet. Beside this the indirect competitor’s also include that sells coffee or related products e.g.

coffee beans.



Future Competitors

The coffee industry is continuing to grow on a very fast scale, numerous coffee chains stores exist,

including 7-Eleven and Dunkin Donut. The three main aspects where in Starbucks differentiates itself from its competitors are price proposal, strategy & points of difference.

Points of Difference (POD)

As per Kotler’s & Keller’s (2009) POD are the various elements or aid that consumers intensely

subordinate with their brand, appraising that they cannot find it any other brand. In case of

Starbucks this embraces:-

A new I Phone application has been created wherein customer can order and pay online for

their products.

Exposure and Involvement in environmental activities i.e. Water and Energy saving

programs, Climate Change, Green Building, Recycling, Cup Summit 3.

Joint ventures with PepsiCo for the new retail product called Frappuccino & with Apple and

its software programme called iTunes for downloading free music at or within their stores.

Starbucks is also indulging in Community activities like catering jobs for USA, Starbucks Red

Foundation, and Starbucks Foundation & Starbucks Youth Foundation.



Points of Parity (POP’s)

Points of parity as proposed by Kotler & Keller (2009) are relations that are not essentially exclusive

however can be communal with other merchandises. In case of Starbucks this embraces:-

The company to a great extent concentrate on more customer service which is also the

prime concern for its business.

Starbucks has always been branded as a very high quality and standard product in the

market, with a reliably very high standard of service

Marketing Mix

Promotion The much often elements of mix used by Starbucks is advertising, Internet marketing, personal

selling, public relations, and sales promotion. (Subhadra 2003) A tiny percentage of Starbucks

revenue is spent on advertising. On the other hand the company mainly relies on its image

advertising like movies, sitcoms. Print media is the majorly used advertising source of Starbuck,

when it does advertise, as its market target is the educated class of people who do a lot of reading

than average (Kembell et al., 2002).

Interacting with customers through digital media (Internet marketing) is where a lot of its promotion

time and money is spent. It slows customers to interact with its product and leave comments. One of

its main aim is to “Serve perfect cup of coffee to customers every time”. Occasionally Starbuckspromotes by distributing free samples.

Starbucks uses Push Strategy as its promotional strategy. It actively involves its customers by means

of direct selling and laying emphasis on promotion and advertising. Among the many many

promotions the company has offered some of the main ones are given below.

There is no restriction on the size of coffee offered to corporate offices.

Contributions to many non-profit organizations in order to improve its brand image

Offering to home taste of tea in foreign countries.

Starbucks Card is one of its major promotions. This is a referral card where in on purchase of

a gift card, not only it shows brand loyalty but also provides free advertising.

Pricing

Starbucks uses many different strategies that help it optimizing based on different situations. One of

which is premium pricing for its high quality and uniqueness of its product. Exceptionality is

associated with is pricing as high priced goods excludes certain socio economic class of buyers

(Solomon et al., 2002). Because of company’s commitment to quality prices & due to product pricing

being premium, none of their adverts show the pricing info. This pricing strategy is used to reinforce

the brand as being socially responsible and justify its price. Also for such premium brands price

promotions tend to hamper their reputation when selling status goods. Hence Starbucks when using

promotions gives out free trial, but never price promotions.



Product

There are many coffee products offered in the market. But the main benefit of Starbuck product is

what is provides to its customers by means of an opportunity to take a break from the busy schedule

in a soothing & relaxing ambience. Apart from its excellent range of beverages, it offers excellent

customer sales through its free Wi-Fi internet and in store atmosphere.

Starbucks products range from a varieties of 30 whole bean coffees to eco-friendly cappuccino,

coffee makers and other starbuck equipment. To sustain the competition, customer needs are often

met with special offers like wraps, oatmeal & smoothies.

Starbucks has always been constantly introducing new foodstuffs, namely "Tazo Tea Infusions",

"Instant via Ready" & "Full Leaf Tazo Tea Lattes". Starbucks claims that "Instant via Ready" is totally

different from its regular brewed coffee (Jargon). While the other two teas are the new tea products

that Starbucks has recently introduced in the market and Starbucks hopes to lure the tea drinkers

with its new products (Edwards). Apart from all this Starbucks sells cappuccino & coffee makers.

These new and sleek design models were meant to replace the huge, old traditional coffee makers.



Place

The only way a product can maintain its exclusivity is by restricting its number and type of

distribution outlets. Hence Starbucks adopts the distribution strategy of sales through stores only to

maintain its exclusivity. Starbucks embarks on the sale of ‘Via’ ready brew coffee, to add to its sales

of coffee beans, all of which are available directly from the store only. By adopting these store only

sales, it not only attracts customers to its sites to try its products, but also matches with its image

that it seeks to portray.

Positioning

It is concerned with how a company is situated in comparison to its competitors or rivals. In other

words, a position is a part of specific target market that a company is claiming for its own. Starbucks

has positioned itself at the top end of the coffee shop market in regards to range of coffee offered to

its customers in relaxed and comfortable environment. The graph below shows Starbucks stand in

the market with respect to its competitors with respect to the different kinds of ambience provided

by the different coffee shops.



Communication

In today’s world, brand management is all about how far the company is able to go in order tosurprise and glee its customers. This could be in any ways by means of internet or retail outlet or

through media advertisements. But for Starbucks it’s totally the opposite, the company that spends

a very small amount towards its marketing. The retail outlets of Starbucks are their only source of

ads. The main aim is to create the ambience and experience in its retail outlets that acts as its

advertisement and hence attract people to go more and more. "Our goal is to continue to stay on

point for new areas of focus we can convert into beverage and food offerings and other forms of

keeping the Starbucks experience out in front of everyone," says Donald, who notes that the

company vets each potential extension for appropriateness and practicality.



Potential Weakness and Recommendations

The below SWOT analysis, analyses the core weakness & threats of the companies and some

recommendations to improve.

SWOT analysis of the Starbucks Brand

It is very clear that current market target of 18-40 years is a narrow segment and based on 2009

annual report, the company has started to consider the below 18’s as a fast and ever increasing

clientele (Linn 2007). Also the Brand Oppositional Loyalty, this is because of the fact that Starbucks

has an outlet in every other road and people feel that they are deprived of the chance to purchase a

coffee of their choice. Due to the demand for coffee today there are many other small and regionalplayers in the market like Coffee Bean, Costa, Caribou, McCafe and many other independent

retailers.

It is very clearly proposed here that, it targets the new socio economic market, youth and the teens.

This is potentially possible by creating new lower priced coffee product. According to Michelli (2007),

“the success of Starbucks is based on creating a distinctive customer experience for their

customers”. Starbucks must start analysing its client’s actual opinion against their current experience

by means of feedback or questionnaire’s. On data gathering, they can analyse the relation between

their service quality and customer’s experience. In adopting the above means, they can minimize the

service-quality lope holes and build on better customer loyalty and trust.



Conclusion

Down to earth, trendy, confident, smooth and Western have been identified as the key core

components of Starbucks that makes it a leader in the market. Apart from that there is also an

emotional response that has been sited towards the brand linked to its personality. Through its

tactical associations and creation of points of difference alllowing for a differentation strategy, the

company has placed itself in a really good position. The company has shown its ability to generate

substantial value to itself from its customers and employees through the brand equity analysis. Due

to its tangable value creation Starbucks is today rated as one of the top 100 brands in the world.

Finally we have identified that one of the important product hampering flaw of Starbucks is the

possible genertion gap that Is being created in tge market between the age group of 12 years to 18

years. This age group is the one that’s imoacts the market, here a reccomendation is given for

Starbucks to youthenise its brand.



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http://en.wikipedia.org/wiki/Lexington,_Massachusetts

http://en.wikipedia.org/wiki/Lexington,_Massachusetts



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http://www.marketresearchworld.net/index.php?option=com_content&task=view&id=566

http://www.youtube.com/watch?v=nbL_jNvrsfI

http://smallbusiness.chron.com/starbucks-target-audience-10553.html


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