Starbucks marketing strategy

Sankaran S Saravanan J

HISTORY

BALDWIN – BOWKER – SIEGL

SEATTLE, 1971 - FIRST STARBUCKS

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In the beginning “ Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow”.

Now “ To inspire and nurture the human spirit - One person, One cup, and One Neighborhood at a time”.

STARBUCKS - Mission

STARBUCKS Coffee

58 years old

Grew up poor

His father had a hard life

Excelled at sports and won an athletics scholarship

Graduated in Business & Marketing

Joined Starbucks Company in 1982 as Diector of Marketing

HOWARD SCHULTZ – CEO OF STARBUCKS

1983 : he went on a trip in Milan:Coffee bars existed on every street2,00,000 in the countryServed as meeting places

His idea: bring the Italian coffee house tradition back to the United States

The pilot coffee concept was successful butthe owners refused to develop the concept

HOWARD SCHULTZ – VISION OF A CEO

1985: Started his own coffeehouse: Il Giornale Coffee

1987: purchased Starbucks Coffee (6 stores)

Renamed Il Giornale Coffee with the Starbucks name

Expended aggressively first across the United States and then around the world

HOWARD SCHULTZ – VISION OF A CEO

2008: regained his status as a CEO of Starbucks

Co-authored: “Pour Your Heart Into It”“Starbucks may become another soulless big chain”

HOWARD SCHULTZ – HIS FEAR

2009: 616 US Starbucks Coffee closed1/3 of the headquarters employees were fired2000 jobs lost

TOO MANY STORES…TOO EXPENSIVE

STARBUCKS TODAY

15,000+ STORES

50 COUNTRIES

1st ROASTER AND RETAILER

2011 - STARBUCKS NEW LOGO

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Marketing Mix

Marketing Strategy

SWOT

Market segmentation Competitive strategy of Starbucks

Globalization strategy of Starbucks

Market Targeting

Market Postioning

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MARKET SEGMENTING

Demographic segmentation(markets by age, gender, income, ethnic background, and family life cycle) .

Geographic segmentation (markets by region of a country or the world, market size, market density, or climate)

Psychographic segmentation, targeting customers based on their lifestyle and attitudes about ‘fairtrade' food.

Behavioural segmentation , Occassion , loyalty program and rewards , benefit sought with offers [ by using starbucks card ]

18-45 year olds

Youngsters who want to gather with their friends

Office workers and students who need to catch up with their work

Those who feel that drinking coffee is "cool"

People who are adventurous, willing to try new things

TARGET

Market Positioning & Positioning Strategy

Starbucks has positioned themselves as a highly respected brand.

The Starbucks company has positioned itself in a way that it can distinguish their products from competition, which gives them an advantage.

Their positioning strategy is customer based, which allows them to give the best customer service.

Starbucks hold onto their sustainable competitive advantage in terms of their customer satisfaction as well as their employee satisfaction.

Brands:Starbucks CoffeeSeattle‘s Best CoffeeTonefazione Ital ia CoffeeTazo TeaEvolution Fresh

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Political Influences :Relationships between coffee producing nations and USState & Local government controls

Economic Influences:Constant demand for food and beveragesChanges in disposable income could influence purchase levels

Social Influences:Consumer preferences could shift from coffee to other beverages

Technological Influences:Use of technology can improve operational efficiencies

STARBUCKS - PEST Analysis

STARBUCKS Coffee

SWOT

Product diversificationEstablished logo, developed brand, copyrights, trademarks, website and

patentsCompany operated retail storesInternational presenceValued and motivated employees, good working environment

STRENGHTS (1/2)

STRENGHTS (2/2)

Good relationships with suppliers

Industry market leaderCustomer loyaltyWide spread and consistentKnowledge basedStrong BoardTrendy brand imageStrong financial foundation

Lack of internal focus (too much focused on expansion) Cross functional management Product pricing is high

WEAKNESSES

Competition (restaurants, street carts, supermarkets, other coffee shops, other caffeine based products)

Market saturationCoffee price volatility in developing countriesNegative publicity from poorly treated farmers in supplying countries

THREATS (1/2)

Expansion into retail operationsTechnological advancesNew distribution channels

(delivery)New productsDistribution agreementsBrand extensionEmerging international marketsContinued domestic

expansion/domination of segment

OPPORTUNITIES

THREATS (2/2)

Consumer trends toward more healthy ways and away from sweet coffee beverages and cakes

Cultural and Political issues in foreign countries

STARBUCKS Coffeeprice BrandQuality Convenience location Variety Reputation Customization Online user

low

High

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Focused Differentiation Serve niche buyers than rivals. Have unique capabilities to serve needs of target buyer segment. Be profitable and offer good growth potential. Resources and capabilities to serve an attractive niche.

STARBUCKS – Competitive Strategy

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Marketing mix

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Marketing Mix

Product

Price

place

Promotion

Customer solution

Customer cost

convenience

communication

4 P’s 4 C’s

To be effective, marketing people have to consider the 4 C’s first and then build the 4 p’s based on requirements

STARBUCKS Coffee

PRODUCTS

Coffee: Eilonde RoastMedium RoastFlavored CoffeeSeasonal Favorites

Handcrafted Beverages:Fresh-brewed coffeeHot and iced espresso beveragesFrappuccino coffee and non-coffee blended bev

eragesTazo teas

Fresh Food Items:Baked pastriesSandwichesSaladsOatmealYogurt parfaitsFruit cups

Starbucks Ice Cream:Super-premium coffeeCoffee-free avors

PRODUCTS

Ready-to-Drink :Starbucks bottled Frappuccino coffee drinksStarbucks Discoveries chilled cup coffeesStarbucks Doubleshot espresso drinksStarbucks Doubleshot Energy+Coffee drinksSeattle‘s Best Coffee Iced LattesTazo bottled iced and juiced teas

Merchandise:Coffee- and tea-brewing euipmentMugs and accessoriesPackaged goodsMusicBooksGift items

Consumer Products:Coffee and Tea :Whole bean and ground coffee,Starbucks VIA Ready BrewTazo tea lterbags and tea latte concentrates

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PRODUCTS

Variety

Quality Design

Features

Brewed coffee

Attractive ,descent, convenient Fresh product

cappuccino, Caramel cappuccino, tea

packaging services

Attractive, easy to handle Just in time ,ready to drink , fair trade policy

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PRICING STRATEGY

PRICE SKIMMING Premium Price for Premium Product

Why the High Prices?

Increase pricing in Fuel/Energy Fair-trade Movement Changes in PEST in US & different geographical location

PRICE

FAIR TRADE MOVEMENT

WHY THE FAIR TRADE MOVEMENT?Help ensure that farmers receive an equitable price for their coffee and strengthen their farms for the future.

HOW IT WORKS? Long term contractsAffordable credit for farmersDirect purchasing Investing social projects in coffee communities

PRICE

FAIR TRADE MOVEMENT

STARBUCKS IN NORTH AMERICA’S LARGEST PURCHASER OF FAIR TRADE CERTIFIED COFFEE.

In 2005 Starbucks purchased 11.5 million pounds of Fair Trade Certified coffee.

Pay $1.42 per pound

PRICE

Fair Trade & the “Starbucks Effect”

Paying premium prices stimulates production of high quality coffee.

Allows farmers to increase income and reinvest in their farms and plan for the future.

Promotes steady and sustainable growth in a market with price fluctuations.

Upholds Starbucks commitment to purchase high-quality product in a socially responsible manner

PRICE

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•Higher income group location place

•Airports ,malls,wel known areas

•Highly visiting areas

•locations of Seattle’s Best or placement of the brand within 30 miles, rebrand some locations as a local shop.

PLACE

STARBUCKS Coffee

PLACE: A PLACE FOR AMBIENCE & EXPERIENCE

Warmth, Comfort, Diversity

A place of quiet contemplation

Some kind of neighbourhood office

A gathering place for neighbours and friends

Promotional Mix

AdvertisingPersonal Selling Public RelationsSales Promotion

Promotional Mix

ADVERTISING Increase from 1.4% to 3% by 2009

RadioTVBillboards

PERSONAL SELLING Baristas must continue to be the very best Starbucks must create an incentive to retain an

d reward baristas

PUBLIC RELATIONS Parties

Big, Juicy PaintingsTrump Tower

Nationwide Coffee Break Public Performances Charitable Contributions

Green initiatives Philanthropic endeavors

Change:Run promotions in conjunction with contributions

SALES PROMOTIONS Return of incentive cards

Tie in with public relationsLoyalty program

Daily coffee break HOLIDAY AD Pass the Cheer

Holiday web siteViral video’s Sample vansAds

Newspapers, Magazines, Radio, and Billboards Short Cups

Promotional Mix

PROMOTION: PRODUCT PLACEMENT

STARBUCKS IN MOVIES

The devil wears Prada

PROMOTION: PRODUCT PLACEMENT

STARBUCKS IN MOVIES

Meet The Fockers 4

PROMOTION: DIRECT MARKETING

SNS

Social media campaign

Starbucks iPhone app

QR Code scanner and start connecting the physical world to your mobile device

Gift card to start a relationship

SNS

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With just 20% of the world's coffee consumed in North America, Starbucks has to aggressively sell its offerings in countries that already have dedicated coffee or tea drinkers.Issues :

Saturated home market – leading to self cannibalization.Reaching Brand Maturity stage in U.S.

International joint venturesCultureGender issuesMarketing channelsCross-cultural management issues

STARBUCKS - Why Globalize ?

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Retailing formula is same throughout the world whereasproduct offerings and are modified to suit local tastes. Starbucks advertising strategies play a crucial role in thesuccess of the business. The advertising strategies adopted by the firm are more localand differentiated rather than standardized.

Global Market Segments National Product HYBRID II MARKETING STRATEGY

STARBUCKS - Global Marketing Mix Strategy

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Some of the methods Starbucks have used to expand and maintain their dominant market position: Buying out competitors' leases.

Intentionally operating at a loss.

Clustering several locations in a small geographical area (i.e.,saturating the market).

STARBUCKS - GLOBAL Entry Strategies

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“RESPECT FOR LOCAL CULTURE”

Chairman Howard Schultz “ We remain highly respectful of the culture and traditions of the countries in which we do business . We recognize that our success is not an entitlement, and we must continue to earn the trust and respect of customers every day .”

Starbucks is dedicated to supporting communities around the world – where we live, where we work and in the countries where our coffees are produced.

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STARBUCKS – CULTURAL DIVERSITY

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Starbucks’s initial foreign forays were launched through jointventure and licensing arrangements with prominent local retailers.

The first market developed in 1996 was Japan with the help ofSAZABY Inc., a Japanese retailer and restaurateur.

STARBUCKS - GLOBAL Expansion

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JAPAN :The Japanese are noted for admiring and adopting American productsand trends such as blue jeans and Coca-Cola.

Critics warned that the Japanese would never buy take-out coffee inpaper cups or accept the interior non-smoking policy.

Starbucks proved them wrong. Some 30% of its customers drinktake-out coffee in those throwaway cups

Globalization – Issues faced and Tackled in different countries

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FRANCE :Starbucks had to deal with an initial lack of acceptance from France's historic cafe culture, with older consumers frowning on a big U.S.coffee house chain with standardized disposable cups.

Younger coffee drinkers in France joined American tourists in Paris to embrace such favorites as Starbucks caramel coffee.

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CHINA:The company is aggressively expanding in China where Chinesetraditionally prefer tea. [eg: TAZO TEA]

Key to success in China are coffee houses that empower China'semerging middle class to publicly display their new lifestyles anstatus while keeping Starbucks beverages as affordable luxuries.

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EnglandSecond biggest overseas market for Starbucks.Tackling imitators aiming at reducing market share of Starbucks.

ItalyLower pricing and popularity of local brands.Culture of serving food with coffee – Starbucks had to addressthe demand.

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STARBUCKS FAILURES

2003: Starbucks closed all six of its locations in Israel due to difficult business environment

2007: closed its store in Beijing's Forbidden City2008: closed 61 of its 84 stores in Australia: Starbucks failed to truly

understand Australia’s cafe culture.

PROMOTION: COMMITMENT TO THE WORLD

Fair trade

Largest buyer of Certified Fair Trade coffee in North America (10% of the global market)

Starbucks has given the FTC label greater visibility, helping to raise consumer awareness

in the process.

Opens farmer support centers in Africa

GLOBAL CONTRIBUTION


Product (red)

Raise awareness and funds to help eliminate AIDS in Africa.

Starbucks’ Red products and Red card:


Helping countries after natural disasters

CONCLUSION

Global company

Howard Schultz: Geocentric Orientation

Adaptation Strategy

Globally Successful

Future Oriented

IT IS NOT JUST COFFEE, IT IS STARBUCKS COFFEE

STARBUCKS TODAY

THANK

YOU ALL!!!