Marketing strategy
Starbucks is one of the leading coffee brands worldwide. It has several shops in different countries that serve customers with their coffee of choice made of premium beans and finished just as they prefer. Starbucks has a mission of being the most renowned coffee brand worldwide. Starbucks, therefore, has implemented the correct marketing strategy to be successful in their long term growth. They have achieved successful results by positioning themselves in the coffee market as a powerful product by creating high standard goods, offer efficient services, and creating new products. This essay aims to analyze how Starbucks has used its marketing strategy to sell its products through various techniques: marketing segmentation, market targeting, differentiation, and positioning strategy, consumer behavior, and finally, the pricing strategy.
Marketing segmentation is a strategy that aims at identifying and outlining the areas in the market that could serve as suitable targets for the marketing plan of the company. Marketing segmentation helps subdivide buyers in the market into different groups that have other behaviors and needs. Starbucks uses its market segments to get a more significant market share in the coffee industry. The company doesn’t only use demographic segmentation regarding gender, social class, age, ethnicity but also uses geographic segmentation drawing on a specific location, be it a country or a region, determining the size of the market and its climate. The demographic segmentation used by Starbucks is people between the age of 25 and 40 years who are in the upper or middle class and another group of people between the age of 18 and 24 years who come from well-off families. The company’s psychographic segmentation indicates that the customers are well off, educated, and come from the middle or upper class. This data shows that Starbucks has divided its markets by selecting the location of the stores with people who are educated and love coffee demographically and geographically.
Marketing targeting is a process by which a company directs its marketing efforts to a group of customers with similar characteristics in terms of location, buying potential, demographics, etc (the target market) that the company wants to sell its good and offer services. Starbucks target market are people who belong to the middle to high class and are high spenders who do not mind spending paying for premium products. They also target urban-ish people (busy people) who live in outlying areas that are said to be the suburbs of urban areas. These people are always on the move and often use their cars to move from place to place, meaning they spend most of the time in traffic and this makes their need of coffee even more.
After Starbucks Company has identified the effective marketing segmentation strategy and the target market, they have to use the positioning and differentiation strategy. Marketing Position is the process in which marketers want their products to occupy a certain position relative to their competitor goods in their target audience minds. Differentiation strategy and position go hand in hand. Differentiation involves a technique that companies use to make their products and services outstanding in the competitive market by providing benefits that are valued by their customers. Starbucks have secured their position in the market as a brand with high reputation. It has also planned its position in a way that their products stand out to distinguish them from their competitors in the market. It’s positioning strategy is customer base, to meet the customers’ expectations or even give them more than they expected. Starbucks has also provided good facilities regarding the layout, music and furniture and has been made a place where customers could meet, relax and interact with one another.
Starbucks has also achieved brand success through two consumer behavior theories: theory of planned behavior and the theory of behavioral learning. The theory of planned behavior shows how Starbucks has been successful based on consumer attitude. People have an attitude towards a brand if they experience pleasure or pain. According to Starbucks, they offer quality services and products which has enabled them develop that attitude by creating pleasure. There are well trained professionals that provide a comfortable and entertaining environment. This result to a positive attitude that the company’s marketers use to engage their customers through a site called My Starbucks Idea which allows them to share their ideas to make Starbucks experience better. The company has also made buying process easier. The behavioral learning theories has helped explain how Starbucks engage their consumers to learn about their brand. There are two approaches attached to this: classical and instrumental conditioning. In terms is classical conditioning Starbucks has done repetition by making their cups easily recognized in public which brings out the brand image that keeps repeating in the minds of the consumers nut it hasn’t done well in creating the relation between the brand and the coffee. About half of the customer link Starbucks to American style instead of coffee. Instrumental conditioning has contributed greatly to the brand’s success. For example, rewarding customers reinforces their positive attitude towards the brand. Starbucks should improve their classical condition to make their customers learn better about their brand.
Finally, Starbucks uses premium price and price skimming strategies to make more profits. It targets customers whose demands won’t change even if there is a price change. In the case of China and Russia it is considered a luxury good with a link to western life. Starbucks captures customers who don’t mind paying more for their services. The increase In profit margin is more than the loss in sales when prices rise. It also increases prices to motivate people to upgrade; this has an impact in increase of profits made.
Starbucks is a renowned coffee brand and has high reputation in the market. Starbucks has implemented different marketing strategies that has contributed to its success and made it stand out against its competitors in the market. Starbucks has also created a comfortable environment for its consumers that induce people into buying their products. The only thing that hasn’t performed well with Starbuck is their classical conditioning in creating brand awareness.