Introduction

Every small or giant business has a prominent role in marketing. To bring any business to fame, an ideal, and best marketing strategy play a very important role.

For growing any business, product planning, price, place, people, physical evidence, promotion, and process are the steps involved in marketing strategy.

It is definitely not hard to guess about Starbucks if we say "coffee." This coffee brand is popular for its unique coffee, which is admired by people globally.

In this article, we will unravel the success secrets and marketing strategy of Starbucks. The article presents the findings, which are obtained from various case studies done on Starbucks' marketing strategy.

The aim of this article from Sprintzeal is to give insight into the practices of Starbucks' marketing strategies, which have helped the coffee chain company establish a commanding global reach and leadership.

So, what is the reason for the popularity of Starbucks across the world? Let’s dive into the article to learn about Starbucks' marketing tactics and which will be helpful for your business too.

 

About Starbucks

Starbucks is a well-known premium coffee brand that has rapidly expanded across the globe. It is an American global coffee house chain whose headquarters are located in Seattle, Washington.

There are over 33,833 stores in 80 countries worldwide. Starbucks ranks 114th among Fortune 500 companies and 288th in the Forbes Global 2000.

The Starbucks cooperative deals with several products, such as hot and cold drinks, evolution fresh juices, whole-bean coffee, caffe lattes, microground instant coffee, also known as VIA, Frappuccino beverages, espresso, and snacks, including items such as chips and crackers. Some of these products are seasonal or specific to the locality of the store.

 

History

One of the first US coffee houses founded in Seattle started its journey in 1971. The coffee shop was originally owned by three US businessmen—Jerry Baldwin, Zev Siegl, and Gordon Bowker—but Howard Schultz later took over and helped build the brand into the massive coffee company it is today.

In the year 1986, the group had six locations in Seattle. By 1989, Starbucks had 46 locations across the Northwest and Midwest, and each year it brewed more than 2,000,000 pounds (907,185 kg) of coffee.

 

Goals and Strategy- Starbucks Marketing Strategy

Since the day of its establishment, the company's aim has been to "inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time."

The Starbucks Company aims to achieve this goal by creating a culture that values acceptance and encourages individual development. Additionally, it aspires to have open and sincere connections with its suppliers, employees, and customers.

Starbucks' marketing strategy is a critical tool for the company in promoting the right product to the right people at the right time and place.

Starbucks' marketing mix works on 4Ps of the marketing strategy model.

Product

"Best in quality and customized to local taste"

High-quality goods justify the high price of the product. They make sure that the products that they offer to their customers are of superior quality to those of their competitors.

Another reason for the masses' attraction to their coffee house is the barista's promise to fix your drink if you don't like it.

Starbucks tailors its products to regional tastes and preferences while putting the product first.

For instance, in Japan, Matcha Frappuccino and Pumpkin Pie are on the menu.

Price

"Value-based and flexible pricing"

In comparison to other brands, Starbucks sells 25% more coffee. Because of the superior quality, and amazing taste of coffee, drinks, and meals, customers are willing to pay extra.

Starbucks works under the policy of premium pricing. The high-end technology, a wide range of options, and excellent customer service make the price worthwhile.

Premium pricing helps keep quality commitments and cater directly to their ideal customers.

Promotion

"Unique and creative advertising"

To market its products, the company employs various methods, which include social media, TV, and advertisements.

Starbucks spends the least on marketing as compared to other major brands but still has a significant impact. This is because of the marketing mix and tactics, which have made all the difference.

This multinational company is not reliable with traditional advertising formats like billboards, newspapers, and magazines. Instead, to attract potential customers, the company believes in word-of-mouth marketing and creative promotional campaigns.

Place

"Uniquely designed stores in different places"

The success of Starbucks is due to its availability. The extensive global presence makes it easy to access the brand anywhere by the customers.

The store ambiance at Starbucks is fantastic and offers a "third place" experience. This positioning strategy has attracted customers which serves as an essential place to visit after their home and office.

 

Challenges

• Raising the prices of its products
• Higher wage payment
• Rising coffee bean prices

Solutions

• Raising the prices of its products

In the period of 2014–2016, there were four price hikes on its products. Customers of Starbucks may favor other upcoming coffee shops due to price increases, which could be a serious problem.

However, the issue might not be as severe as one might believe. Starbuck's marketing strategy works on uniqueness and innovation, and its store is one of them. Customers are drawn to the stores because they are inviting and have an elegant ambiance.

The different types of coffee experiences, interactive experiences with bars and baristas, and many more such services have facilitated the establishment of brand presence and value.

As a result, we think that while there may be some customer loss as a result of price increases, it will be more than made up for by excellent client retention and rising customer acquisitions.

 

• Higher wage payment

The rising cost of labor and raw materials is the main reason behind the increase in end-product pricing. It is believed that companies' already modest margins, particularly at licensed stores, will suffer from an increase in the federal minimum wage.

The reasoning, meanwhile, ignores the fact that labor expenses make up the smallest proportion of the company's operational costs.

In addition to it, the company already pays wages that are significantly greater than the minimum required and are a popular choice among employees. Therefore, we think that an increase in the federal minimum wage will only benefit Starbucks.

 

• Rising prices of coffee beans

The main reason behind the rise in the price of coffee beans is the drought in Brazil and Vietnam, which are the two largest producers of coffee beans.

Starbucks' margins were harmed by an increase in coffee bean prices as well as a supply shortage.

However, the company has taken action by notifying its customers about the price hike. As per the management of Starbucks, the recent price hike is targeted at the bakery and cold beverage menu items.

Starbucks is able to keep its customers even as its prices increase, all because of the consumer demand for its products and services.

As well as the increased family income, the improved consumer sentiment will make it easier for consumers to accept price increases that are likely to last for a long time.

Takeaway

Starbucks is a multinational coffee chain that has a dominant global presence and leadership. A unique and innovative Starbucks marketing strategy is the main reason behind its success.

The best part of Starbucks' marketing strategy is that they keep their promise of offering the best quality product, exceptional services, and an inviting atmosphere to every customer who visits their uniquely designed store.

In addition to the company’s product, ambiance, and services, its marketing strategy of Starbucks targets high-income, corporate, and educated customers who are willing to spend more for premium coffee.

Starbucks' marketing strategy has shown that it is possible to build a brand from scratch with exceptional customer service and high-quality products.

With a unique and strong marketing plan and digital marketing strategy, you can grow your company. Enroll in Sprintzeals' Digital Marketing Masters Program Certification Training to begin the process of developing skills.

Advance your profession with our certification courses, or chat with our course expert for any course-related query.

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