Starbucks, a Market Analysis
Starbucks is a major, world wide coffee retailer specializing in a variety of brands of blend coffee and iced beverages, among other related products. Within the market sector Starbucks exists stands several competing companies such as The Coffee Bean & Tea Leaf and Caribou Coffee. Each company shares similar strategies, appealing to a similar demographic, and hails themselves as the high-end of coffee-based shops/cafes. They also share a similar promise of quality ingredients and service. The difference is, while a company like Starbucks focuses on the behavior of consumers to market their product, a company like Caribou coffee relies on the taste and quality of their product, and The Coffee Bean & Tea Leaf rely on location and ease of access.
Starbucks was selected as the primary company to analyze due to its immense popularity and success over the last decade. It has become one of the most iconic symbols of coffee. A whole culture has developed from this famous chain. In the 1970's, the first Starbucks opens. The origins of the name come from Herman Melville's Moby Dick, about 19th century whaling industry.
Starbucks offers more than 6,500 self-operated and licensed stores in over 38 countries outside the U.S. And 10,924 stores in the U.S. (Starbucks Coffee Company, 2011, p. 1) . It all began in 1971 when the Starbucks Coffee Company formed a long-standing commitment to ethically sourcing and roasting high quality arabica beans and brewing top quality coffee. As of 2013, the company reached global recognition and has become the premier roaster and retailer of specialty coffee in the world. "Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup" (Starbucks Coffee Company, 2011, p. 1) Their stock market value as of 2013 is $51.64 billion with 2012 revenue of $13.29 billion.
Starbucks is apart of the restaurant industry with specialization in coffee, tea, and baked goods. Starbucks is what some consider a fast food franchise because drinks and food served there is made or ready-made and available within a short time period. Like other franchises of its kind, it focuses on specialty drinks and fast service. Although it faces stiff competition from other retailers like Dunkin Donuts and now McDonalds and Subway, they have managed to maintain a loyal and consistent customer base.
Their commitment to quality service and removal of GMO ingredients ensures customers they are getting more for their money when they buy from there. Along with fast service and a range of products, Starbucks offers what other fast food chains lack, free wifi, and an inviting atmosphere. In fact, most fast food chains try to promote a clean and inviting image when showcasing their stores. Like Subway and McDonalds, Starbucks has adopted a uniform look throughout all of their stores.
And like Subway, they have also offer franchising opportunities, although they do not offer if for everyone and are strict with who becomes a franchiser. All in all it is very difficult to remain popular in an ever-expanding market. The coffee drinking culture has increased and expanded with special interest in high-end coffee. People do not just want fast and tasty coffee, but also coffee that is healthy and comes from a sustainable and fair trade source. Like with all fast food chains, customers now want better ingredients from the food they buy and expect that in their fast food. Starbucks has maintained and set forth high standards for their food and drinks by eliminating high fructose corn syrup from most of their products and keeping GMO ingredients from their baked goods.
Marketing segmentation allows marketers to group and classify their customers as well as identify the specific needs for each group with higher accuracy (Weinstein & Weinstein, 2004, p. 12). Starbucks like Caribou Coffee and The Coffee Bean & Tea Leaf, has adapted several marketing strategies in order to gain and retain customer loyalty and satisfaction. One of the main marketing strategies a company like Starbucks employs is psychographic segmentation. Psychographic segmentation consists of dividing consumers from a market into groups based on social class, lifestyle, or personality characteristics (Mayo, 1977, p. 34). This kind of strategy allows for appropriate allocation of resources proper adjustment of marketing mix.
The primary segmentation criteria Starbucks uses is psychographic segmentation. The company targets customers based on their lifestyle choices, and attitudes concerning 'fairtrade' food (Yu & Fang, 2009, p. 1273-1285). The main group Starbucks advertises for is the "serious coffee drinker" or someone who prefers an upscale market coffee. Their...
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There is an abundance of work going on inside Starbucks right now to bring GIS expertise in-house to aid in their segmentation planning based on taking both demographic, psychographic and attitudinal segmentation criteria overlaid against potential market areas. Marketing Mix Analysis The following is an analysis of the marketing mix for Starbucks compared to Dietrich Coffee and Coffee Bean and Tea Leaf Company. Product Starbucks' ability to continually innovate new products is central to
Research also helps in planning marketing programs through helping to identify new opportunities and thus to evaluate the potential for a new idea and also to identify the areas where the marketing efforts will be concentrated KnowThis LLC, 2012() Research also helps to minimize risks. By the marketing managers being able to plan the marketing efforts effectively and they can then identify what is required and to ensure that the
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