Startbuck Strategies

							Starbucks Corporation Marketing Strategies

Headquartered in Seattle Washington, Starbucks Corporation is a premium coffee retailer
offering a wide selection of hot and cold beverages, fresh food, premium ice cream,
merchandise, and entertainment. Starbucks opened its first location in 1971 at Seattle’s
Pike Place Market. Although Starbucks closed approximately 600 underperforming stores
this year, it still operates more than 16,000 stores worldwide with over 11,000 stores in the
United States. (Herman, 2008). Each store varies its product mix depending upon the size
of the store and its location. Larger stores carry a broad selection while smaller stores offer
a more limited selection.

The product strategy of Starbucks can be summarized by the company’s vision statement.
As stated on its website, the company’s vision is to “establish Starbucks as the most
recognized and respected brand in the world and to be the premier purveyor of the finest
coffee in the world” (Starbucks, n.d., p. 1). Starbucks has strong global brand recognition
which is built on a solid reputation for premium products. The company is well known with
consumers for making high quality beverages, food and associated goods. Starbucks takes
pride as being recognized and respected as the top coffee store in the world (Allison, 2007,
p. 2). The atmosphere of its stores is what keeps customers coming back. The stores are
designed where customers can get in and out quickly or stay and enjoy the camaraderie.
Starbucks does not mass advertise. Most of their marketing is done by word of mouth, and
in supporting local events within the communities where their stores are located. As Howard
Schultz, the CEO of Starbucks states:

At Starbucks, we have integrated ourselves in a way that is very different than selling a cup
of coffee. We have an emotional relationship with our customers. It’s not one thing, but a
lot of things. It’s not good enough to have a good ad, but everything you do helps complete
the circle…the packaging, the community involvement, the service all help build that
emotional connection. (Lewis, 2008, p. 3)

Starbucks has created very loyal customers who continue to return to Starbucks. These
customers are willing to pay four dollars for a cup of coffee. The average Starbucks
customers are middle to upper class, working adults. Also, there are a lot of college
students who are extremely loyal to Starbucks as well. “These students will go to Starbucks,
spend their money on drinks and hang around to do homework or meet with friends, turning
Starbucks into a social meeting place” (Bell, 2006, p. 3). Starbucks also offers kid-friendly
drinks such as the Frappuccino. The company does not directly market to this customer
base, but their coffee appeal reaches all generations.

Before Starbucks was available nationwide, the option for gourmet coffee was limited. One
option was to go to a gourmet café, which usually did not stay open for extended or early
hours of the day. Another option was to pick up a cup of coffee from a local gas station or
from a fast-food restaurant in which it could not be specifically blended to the customer’s
preference. Starbucks saw this opportunity and fully captured the market with a quality
drink and a social environment. Starbucks is the first mainstream coffee shop that allows
customers to dictate how their coffee should be made. Customers can choose a product that
is fine tuned to their exact specifications.
Starbucks has distinguished its product based on quality and image. The company is ranked
as one of the world’s 50 most valuable brands (Adams, 2007, p. 4). Starbucks has done an
amazing job establishing an emotional connection with its customers and is able to promote
loyalty to its brand. When carrying a Starbucks cup, the customer feels like they belong to
an elite social class. Starbucks has paralleled its branding with the actions found at any
Starbucks across the world. The company differentiates its new products based on their
unique features and brand image. They have an excellent company vision, which they stick
to, which in turn assists their brand image. Starbucks’ image has been achieved not only
through this and their massive global entrance, but through their ability to provide honest
quality service.

In addition to its numerous franchises and licensed locations, customers can also find
Starbucks in grocery stores, shopping centers, airports, bookstores, and hotels. Next week,
Starbucks will open its first store in Portugal. “We are thrilled that we will be able to share
our passion for high-quality coffee and the Starbucks experience with the people of
Portugal. Additionally, we are excited to offer traditional Portuguese favorite food items that
will complement our high-quality coffees” (Starbucks, p. 2). Starbucks also has several joint
corporate ventures with major suppliers and distribution channels. For instance, in 2006,
Starbucks announced an expansion of relationship with Kraft to distribute Starbucks coffee
into retail channels in Canada and the U.K. In that same year, Starbucks partnered with
Pepsi-Cola North America to roll out Starbucks hot vending machines where a latte is heated
on demand for customers (Starbucks, p. 2). Through its numerous partnerships with
grocery stores, franchises, record labels, and outside vendors, Starbucks has the
opportunity to expand its brand name to places it may not usually be seen.

In 2001, Starbucks started to offer the Starbucks Card. This is a store value card for
customers to use and reload. The company has created an opportunity to improve customer
service, shorten lines and make a customer’s visit at Starbucks quicker and more
convenient. In 2003, Starbucks launched the Starbucks Card Duetto Visa. This card blends
the functionality of a regular Visa card along with a reloadable Starbucks Card. The next
year, Starbuck launched a Hear Music media bar with a CD burning service in select stores.
Recently, Starbucks launched mystarbucksidea.com on their website. This allows the
customer a place to post and share ideas about Starbucks. Some of the suggestions
include: Italian cream soda, seasonal ice creams, pumpkin spice syrup, and chocolate chip
muffins (Starbucks, p. 4). This site is open to all visitors who register.

There are many competitors in the coffee industry. Starbucks needs to be aware of what is
going on in the competitive markets they serve. The company should push to be the first
mover in order to compete against this potential market threat. Starbucks must invent new
products to stay ahead of such competitive tactics. If Starbucks has the chance of
preventing a competitive company from being the innovator, it must do so by being the
innovator itself.