Starbucks and its strategic marketing proposal

By October 19, 2018 Marketing
Starbuscks-Marketing

Starbucks is a franchise of coffee shops founded in Seattle in 1971, which currently operates in America, Europe, the Middle East, Africa, China and Asia Pacific. It has 277,000 employees, with a sales volume of 23.5 billion dollars in 2018[1] and 27,339 stores worldwide in 2017[2].

What makes Starbucks different from the marketing mix perception?

The marketing proposal that Starbucks has made in its expansion process has a global nature. This article analyzes this marketing strategy in relation to four different elements: product, price, advertising, and distribution channels.

  1. Product approach

1.1. An easily recognizable product

If we carry out an analysis of the product we see how essential the logo is for this brand. Wherever there is a Starbucks in the world, it identifies with the same logo, that is, the green double-tail siren.

1.2. Personalization of the product

The possibility to choose and customize the coffee is a key attribute that is increasingly appreciated by consumers. In addition to writing the name of each consumer in the plastic cups, they can choose from a large number of options to buy their coffee[3]. In this way, they are no longer limited to classic coffee, but have created new presentations and flavors looking for please the customer and satisfy different tastes. With all this, Starbucks has achieved that the consumer feels that he has control over what he consumes.

Starbucks-Marketing-Dos AguasSource: elaborated by Dos Aguas Consulting

1.3. Quality of the product

Starbucks sells high quality products and their price is high compared to coffee places. They have used a high value-added approach that is valued by high-middle class customers but also invites clients with low purchasing power (especially teenagers)[4].

1.4 An emotional connection with customers

They have created what they call “the third place”. If the first place is home and the second place is work, the third place is where everyone goes after home and work. To achieve that third place, they have generated an atmosphere of relaxation that takes customers to a unique experience[5]. In this way, the company offers a connection between the store and the feeling of drinking coffee in a familiar place that makes the costumer feel as if he were at home. Thus, their product is not limited to coffee, but goes beyond and includes a comfortable environment, where one can study, work, read, chat, etc. The strategy therefore is based on converting coffee shops in places that attract customers for the service of excellence, the aroma of coffee, the comfortable open spaces and armchairs, free wifi, and continuos cleaning[6]. All in all, the ideal environment.

1.5. Success

Drinking Starbucks coffee is associated with a modern and successful life. In many TV series and films, principal actors and actresses drink their coffee and they usually have something in common; being young, attractive, and successful. So when the costumer buys a coffee from Starbucks, he is buying more than just a coffee. He is imitating the role set by the movies he watches.

Starbucks-Marketing-Dos Aguas

Source: elaborated by Dos Aguas Consulting. From left to right: Sandra Bullock in “The Proposal” (2009), Sara Jessica Parker in “Sex and the City” (2008), Anne Hathaway in “Devil wears Prada” 2006), Christopher John Grace in “In Good Company” (2004), Alicia Silvestone in “Clueless” (1995), and Tom Hanks in “You’ve Got Mail” (1998). 

2. Price approach

Starbucks products are in a higher range than the rest of its competitors because Starbucks uses a fixing strategy of premium prices. This strategy takes advantage of the trend of consumer behavior to buy more expensive products, based on the perception that high price means high value. Through this strategy of high prices, the company maintains its upmarket image[7].

  1. Advertising approach

Starbucks’ main promotion is spread by their customers. Although the company carries out campaigns when introducing new products or flavors into the market, their advertising expenses only represent around 1% of their income. This strategy goes in connection with the fact that Starbucks does not need advertising because the cinema, tv series, and celebrities already carry out promotional tasks. It is common to see photos in the tabloid journalism of a famous person with a coffee cup from Starbucks.

  1. Distribution channels approach

Starbucks offers most of its products through the company’s coffee shops. However, they also sell on-line store and in the Starbucks app. This means that the company is in tune with the new technologies and market conditions[8].

Conclusion

In short, the feature that differentiates Starbucks the most is that they sell the experience of -emotions while drinking coffee- to customers of upper-middle class that live in the city.

What can Dos Aguas Consulting do for you?

Dos Aguas Consulting can contribute with our knowledge of the Spanish market and the profile of the Spanish consumer. In our work as a company specialized in advising and supporting international companies that want to invest in Spain, we can help you find clients and make a profitable business in the country. We can design your marketing strategy or adapt it to this market particularities. Get in touch with us, our trade and marketing advisors will help you!

Sources:

[1] Forbes (2018) Forbes Companies list. Available online (link). Last accessed: 18.10.2018.

[2] Statista (2018) Number of Starbucks stores worldwide from 2003 to 2017. Available online (link). Last accessed: 18.10.2018.

[3] Entrepreneur (February 19th, 2011) El secreto del éxito de Starbucks, Entrepreneur. Available online (link). Last accessed: 18.10.2018.

[4] César Piqueras (September 12th, 2014) La clave del Exito de Starbucks no es el café. Available online (link). Last accessed: 18.10.2018.

[5] Franquicias de café (November 5th, 2013) Estrategias de Mercado de Starbucks. Available online (link). Last accessed: 18.10.2018.

[6] Luis Mauricio Mija (March 4th, 2016) Starbucks: 5 estrategias de negocio – Análisis del modelo de la compañía de café más grande del mundo. Available online (link).Last accessed: 18.10.2018.

[7] Roberta Greenspan (January 31th, 2017) Starbucks Coffee’s Marketing Mix (4Ps), Panmore Institute website. Available online (link). Last accessed: 18.10.2018.

[8] Roberta Greenspan (January 31th, 2017) Starbucks Coffee’s Marketing Mix (4Ps), Panmore Institute website. Available online (link). Last accessed: 18.10.2018.

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