STARBUCKS MARKETING
Founded in Seattle, Washington in 1971, Starbucks is arguably America’s largest coffee house. The primary product served by a chain of coffeehouses is darkly roasted coffee characterized by its taste and quality. The company was among the second wave of American coffee makers; however, with time, competition sprung up in the third wave. The changing times have, therefore, necessitated diversification and ingenuity from the company. The various moves made by the company have led to the unprecedented success of the company being valued at US$14.89 billion plus in revenue by the end of 2013 (Geereddy, 2013). Consequently, the various marketing strategies used by the corporation raises two central questions.
Is Starbucks a product or a service?
The power house is a relatively old dog in the coffee business. Given that the company was founded in the early 1970s, the target demographic of the time must be elderly in the 21st century. It is with this thought in mind that the corporation sought out to lure in the youth through many marketing strategies, some of which have worked tremendously (Dudovskiy, 2017). Among these strategies is segmentation, targeting, and positioning with the main aim of identifying appropriate groups of people among the general population as future customers (Kotler, 2012). It involves introduction of products and services that resonate well will the particular segments wants and needs (Haskova, 2015). Thus, the company directly employed a method of dividing the market and conquering it.
The named strategy is visible in several ways. First off, the coffee chain giant utilizes mono-segment positioning. Here, they mainly target premium customers who pay more to receive quality products and services. Adaptive positioning has also been an influential strategy (Haskova, 2015). The company closely monitored emerging trends and utilized them in marketing; for example, increased health awareness led to the production of low calories coffees like Chai Tea Latte, Caffe Misto and Iced Americano (Dudovskiy, 2017). The other method is standby positioning where the company makes products that outlast market changes to find demand, for instance, Frappuccino (Dudovskiy, 2017). Therefore, the company uses these strategies as services meant to deliver its products.
How do the discussed approaches factor in the development of the Starbucks brand?
The various positioning strategies can be interpreted as services by the customers. For the premium customer, for instance, the technique used to roast and brew the beans is as much of a product as the final coffee presented in the mug. The company has capitalized more on selling its quality services than the tangible coffee because at the end of the day, people can just make their coffee at home. The intangible resources in the company are instrumental in attracting and keeping customers. Additionally, diversification plays a crucial role in building the corporations brand. Currently, their diversification pack includes the coffee beans and equipment, fresh brewed coffee cappuccino and espresso, lattes, music CDs, Wi-Fi, juices, food items, and efficient employees to deliver the needed services (Geereddy, 2013). Therefore, in as much as the principal product sold by the company is coffee, the various marketing strategies employed position Starbucks as a service brand above all else.
How can companies use the principles of marketing?
Businesses can gain a lot from the adoption of service marketing as evidenced by Starbucks. The primary function of marketing is to sell consumer packaged goods (Hota, 2008). Given that the service industry in America has phenomenally grown to include a noteworthy portion of the gross domestic product, companies should consider diversification of their products to take advantage of the growing industry.
Services are delivered by a person, and thus, homogeneity may vary (Kotler, 2012). Businesses should consider taking appropriate measures to ensure the services are as similar as possible. Considering Starbucks, for instance, their customers have the same level of service expectation no matter where in the world they are being served. This experience helps market the enterprise further through word of mouth as well as other means. The employees do not own the service in any way but are trained and encouraged to serve every customer despite their racial orientation, gender, religion or financial situation the same way. Thus, by standardizing the company’s services, clients in turn help with marketing them.
The other marketing principle is the pricing of the product. Putting an exact value on a service is a tricky affair when compared to goods (Kotler, 2012). For services, the price of the product being served, say in restaurants, has to be factored in, as well as labor and overhead costs. For effective pricing, companies should avoid exaggeration of prices and under charging in equal measure. The quality of the service should be reflected in the bill as the consumer is after the entire experience. Thus, pricing determines also the success of the company involved in service delivery.
Moreover, services can be easily replaced. A crucial part of service marketing, therefore, involves a continuous process of promotion (Kotler, 2012). This process helps keep fresh the idea of the service in mind while differentiating it from others. A good example is the overwhelming number of Starbucks logos and advertisements virtually everywhere. Accordingly, part of service marketing involves investing in promotion
People form the corner stone of the entire organization in the service industry (Kotler, 2012). A company willing to improve in service delivery should create environments that are employee friendly. Additionally, they should structure the enterprise in a way that the stuff consistently works on improving the quality of the services as much as possible as a company culture. Referring to Starbucks, among its defining characteristics is a quality workforce with the freedom to express their ideas. This situation shows the value of its staff. Consequently, a good workforce influences service marketing.
For companies like Starbucks, branding is essential in generating consumer loyalty (Haskova, 2015). As a service marketing companies have to learn to create a dependency in the consumer. This method fundamentally involves a combination of the other discussed factors to build a brand for the consumers. These elements are the quality of the products and services and the friendliness of the environment: One without the other is futile in creating brand loyalty. Starbuck customers, for instance, have been reported claiming that they do not know how they would live without the product. The devotion can be credited to the creation of value for their customer in a friendly in-store different from other fast coffee houses (Haskova, 2015). Accordingly, companies should inspire dependability as a service marketing plan.
Conclusion
Indeed, Starbucks is an industry giant in the US. Since its inception, the company has grown into a billion dollar coffee chain stores by ingenuity in the service sector. Its adaptability to changing times has helped build a name as a service brand by targeting specific individual groups on which they capitalize. Other business should emulate the strategies utilized by the coffee giant in marketing its services, which mainly include product homogeneity, appropriate pricing, constant promotion, heavily investing in employee service delivery culture, and creation of brand loyalty.
References
Dudovskiy, J (2017). Starbucks Segmentation, Targeting and Positioning – Targeting Premium Customers with Quality Products and Service. [online] Research-methodology. Available at: http://research-methodology.net/starbucks-segmentation-targeting-and-positioning-targeting-premium-customers-with-quality-products-and-service/ [Accessed 29 Jul. 2017].
Geereddy, N. (2013). Strategic Analysis of Starbucks Corporation. [online] Harvard Scholar. Available at: https://scholar.harvard.edu/files/nithingeereddy/files/starbucks_case_analysis.pdf [Accessed 29 Jul. 2017].
Haskova, K., 2015. Starbucks Marketing Analysis. CRIS-Bulletin of the Centre for Research and Interdisciplinary Study, 2015(1), pp.11-29.
Kotler, P., 2012. Kotler on marketing. Kuala Lumpur: PTS Professional.
